AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 2006
File No. 001-32903

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 
AMENDMENT NO. 2
TO
FORM 10
 
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934

 
THE WESTERN UNION COMPANY
 
(Exact Name of Registrant as Specified in Its Charter)

Delaware	 	20-4531180	
(State or Other Jurisdiction of
Incorporation or Organization)	 	(I.R.S. Employer Identification No.)	
 
THE WESTERN UNION COMPANY
12500 East Belford Avenue
Englewood, Colorado 80112
Telephone: (303) 967-6756
 
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)

 
Securities to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of Each Class
to be so Registered	 	Name of Each Exchange on Which
Each Class is to be Registered	
 	 	 	
Common Stock, par value $0.01 per share	 	New York Stock Exchange	

 
Securities to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:
 
None

 

INTRODUCTORY NOTE
 
The combined financial statements and financial information of The Western Union Company included herein have been restated to reflect our conclusion that certain of our foreign exchange forward contracts did not qualify for cash flow hedge accounting. We believed the initial accounting treatment for certain of our foreign currency forwards treated as hedges properly reflected the intent and economics of the underlying transactions; however, the interpretations of how to apply Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”), and how to adequately provide documentation for such instruments so as to qualify for hedge accounting are very complex. Based on an evaluation of our initial hedge documentation, we have concluded that certain of our foreign exchange forward contracts do not qualify for cash flow hedge accounting since the initial documentation with respect to these instruments did not meet the technical requirements of SFAS No. 133. Therefore, the combined financial statements and financial information included herein have been restated to reflect any changes in the market value of these derivative instruments in the combined statements of income rather than in combined other comprehensive income (loss), a component of net investment in The Western Union Company. We have also restated our combined financial statements and financial information to reflect foreign currency translation adjustments of certain notes receivable from affiliates denominated in euros and changes in the market value of certain foreign currency swap agreements with First Data in the combined statements of income. These notes receivable and foreign currency swap agreements with affiliates will be settled in connection with the spin-off. The net effect of these adjustments was to increase net income by $29.2 million, decrease net income by $0.5 million and decrease net income by $5 million for the years ended December 31, 2005, 2004 and 2003, respectively, and these adjustments had no effect on total cash flows.
 
Further information relating to the restatement and the effect is more fully described in Note 1 to our historical combined financial statements under the caption “Financial Statement Restatement.”
 
2

THE WESTERN UNION COMPANY
INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED BY REFERENCE INTO FORM 10
 
Certain information required to be included herein is incorporated by reference to specifically identified portions of the body of the information statement filed herewith as Exhibit 99.1. None of the information contained in the information statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.
 
Item  1. Business.
 
The information required by this item is contained under the sections “Summary,” “Risk Factors,” “The Spin-Off,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business,” “Our Relationship with First Data After the Spin-Off,” “Where You Can Find More Information” and “Index to Combined Financial Statements and Schedule” (and the statements referenced therein) of the information statement. Those sections are incorporated herein by reference.
 
Item  1A. Risk Factors.
 
The information required by this item is contained under the section “Risk Factors” of the information statement. That section is incorporated herein by reference.
 
Item  2. Financial Information.
 
The information required by this item is contained under the sections “Summary,” “Risk Factors,” “Capitalization,” “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Index to Combined Financial Statements and Schedule” (and the statements referenced therein) of the information statement. Those sections are incorporated herein by reference.
 
Item  3. Properties.
 
The information required by this item is contained under the section “Our Business—Properties and Facilities” of the information statement. That section is incorporated herein by reference.
 
Item  4. Security Ownership of Certain Beneficial Owners and Management.
 
The information required by this item is contained under the section “Ownership of Our Stock” of the information statement. That section is incorporated herein by reference.
 
Item  5. Directors and Executive Officers.
 
The information required by this item is contained under the sections “Our Management” and “Executive Compensation” of the information statement. Those sections are incorporated herein by reference.
 
Item  6. Executive Compensation.
 
The information required by this item is contained under the section “Executive Compensation” of the information statement. That section is incorporated herein by reference.
 
Item  7. Certain Relationships and Related Transactions.
 
The information required by this item is contained under the sections “Financing,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Relationship with First Data After the Spin-Off” and “Certain Relationships and Related Transactions” of the information statement. Those sections are incorporated herein by reference.
 
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Item 8. Legal Proceedings.
 
The information required by this item is contained under the section “Our Business—Legal Proceedings” of the information statement. That section is incorporated herein by reference.
 
Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
 
The information required by this item is contained under the sections “Summary,” “The Spin-Off,” “Dividend Policy” and “Description of Our Capital Stock” of the information statement. Those sections are incorporated herein by reference.
 
Item 10. Recent Sales of Unregistered Securities.
 
On May 31, 2006 the registrant issued 100 shares of its common stock, par value $0.01 per share, to First Data Corporation for an aggregate consideration of $1.00 paid to the registrant by First Data Corporation. That issuance was not registered under the Securities Act of 1933, as amended, in reliance on the exemption provided by Section 4(2) of such Act.
 
Item 11. Description of Registrant’s Securities to be Registered.
 
The information required by this item is contained under the sections “Description of Our Capital Stock” and “Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-Laws” of the information statement. Those sections are incorporated herein by reference.
 
Item 12. Indemnification of Directors and Officers.
 
The information required by this item is contained under the section “Limitation of Liability and Indemnification of Our Directors and Officers” of the information statement. That section is incorporated herein by reference.
 
Item 13. Financial Statements and Supplementary Data.
 
The information required by this item is contained under the sections “Summary,” “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Index to Combined Financial Statements and Schedule” (and the statements referenced therein) of the information statement. Those sections are incorporated herein by reference.
 
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
 
None
 
Item 15. Financial Statements and Exhibits.
 
(a)	Financial Statements	
 
The information required by this item is contained under the section “Index to Combined Financial Statements and Schedule” of the information statement. That section is incorporated herein by reference.
 
(b)	Exhibits	
 
See below.
 
4

The following documents are filed as exhibits hereto:

 Exhibit
Number	 	  	Exhibit Description	
		
2.1	 	  	Form of Separation and Distribution Agreement	
		
3.1	 	  	Form of Amended and Restated Certificate of Incorporation of The Western Union Company	
		
3.2	 	  	Form of Amended and Restated By-laws of The Western Union Company	
		
10.1	*	  	Form of Tax Allocation Agreement	
		
10.2	 	  	Form of Employee Matters Agreement	
		
10.3	 	  	Form of Transition Services Agreement	
		
10.4	 	  	Form of Patent Ownership Agreement	
		
10.5	 	  	Form of Retail Money Order Issuance and Management Services Agreement	
		
10.6	 	  	Form of Western Union Company 2006 Long-Term Incentive Plan	
		
10.7	*	  	Form of The Western Union Company Executive Severance Plan	
		
10.8	*	  	Form of Western Union Supplemental Retirement Plan	
		
10.9	 	  	Form of 2006 Non-Employee Director Equity Compensation Plan	
		
10.10	 	  	Form of Director Indemnification Agreement	
		
10.11	 	  	Employment Agreement, dated as of January 30, 2004, between Western Union Hong Kong Limited and Ian Marsh	
		
21.1	 	  	Subsidiaries of The Western Union Company	
		
99.1	 	  	Preliminary Information Statement of The Western Union Company dated August 28, 2006	
		
*	 	  	To be filed by amendment.	
 
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SIGNATURES
 
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	 		 	THE WESTERN UNION COMPANY	
					
	 	Date: August 28, 2006	 		 	By:	 	/s/    C HRISTINA A. G OLD	
	 		 		 	Name:	 	Christina A. Gold	
	 		 		 	Title:	 	President and Chief Executive Officer	

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INDEX TO EXHIBITS

Exhibit
Number	 	  	Exhibit Description	
		
2.1	 	  	Form of Separation and Distribution Agreement	
		
3.1	 	  	Form of Amended and Restated Certificate of Incorporation of The Western Union Company	
		
3.2	 	  	Form of Amended and Restated By-laws of The Western Union Company	
		
10.1	*	  	Form of Tax Allocation Agreement	
		
10.2	 	  	Form of Employee Matters Agreement	
		
10.3	 	  	Form of Transition Services Agreement	
		
10.4	 	  	Form of Patent Ownership Agreement	
		
10.5	 	  	Form of Retail Money Order Issuance and Management Services Agreement	
		
10.6	 	  	Form of Western Union Company 2006 Long-Term Incentive Plan	
		
10.7	*	  	Form of The Western Union Company Executive Severance Plan	
		
10.8	*	  	Form of Western Union Supplemental Retirement Plan	
		
10.9	 	  	Form of 2006 Non-Employee Director Equity Compensation Plan	
		
10.10	 	  	Form of Director Indemnification Agreement	
		
10.11	 	  	Employment Agreement, dated as of January 30, 2004, between Western Union Hong Kong Limited and Ian Marsh	
		
21.1	 	  	Subsidiaries of The Western Union Company	
		
99.1	 	  	Preliminary Information Statement of The Western Union Company dated August 28, 2006	
		
*	 	  	To be filed by amendment.	
 
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Exhibit 2.1
Separation and Distribution Agreement
Dated as of                      , 2006
Between
First Data Corporation
and
The Western Union Company

TABLE OF CONTENTS

 	 	 	  	Page	
ARTICLE I
DEFINITIONS	
			
SECTION 1.1	 	Definitions	  	1	
SECTION 1.2	 	Interpretation	  	12	
ARTICLE II	
ACTIONS PRIOR TO THE DISTRIBUTION DATE	
			
SECTION 2.1	 	SEC and Other Securities Filings; Western Union Note Offering	  	13	
SECTION 2.2	 	Financial Instruments.	  	14	
	
ARTICLE III	
BUSINESS SEPARATION	
			
SECTION 3.1	 	Actions Taken Prior to the Execution of this Agreement	  	15	
SECTION 3.2	 	Actions Prior to the Separation	  	16	
SECTION 3.3	 	The Separation	  	16	
SECTION 3.4	 	Termination of Existing Intercompany Agreements	  	16	
	
ARTICLE IV	
THE DISTRIBUTION	
			
SECTION 4.1	 	Record Date and Distribution Date	  	17	
SECTION 4.2	 	Increase In Western Union Authorized Shares	  	17	
SECTION 4.3	 	The Agent	  	18	
SECTION 4.4	 	Delivery of Western Union Shares	  	18	
SECTION 4.5	 	The Distribution	  	18	
SECTION 4.6	 	Delivery of Western Union Shares	  	18	
SECTION 4.7	 	Distribution is at First Data’s Discretion	  	18	
SECTION 4.8	 	Additional Approvals	  	18	
	
ARTICLE V	
ACTIONS SUBSEQUENT TO THE DISTRIBUTION	
			
SECTION 5.1	 	Actions Following the Distribution	  	19	
	
ARTICLE VI	
BUSINESS SEPARATION CLOSING MATTERS	
			
SECTION 6.1	 	Delivery of Instruments of Conveyance	  	19	
SECTION 6.2	 	Provision of Corporate Records	  	20	

					
 	 	 	  	Page	
ARTICLE VII	
NO REPRESENTATIONS AND WARRANTIES	
			
SECTION 7.1	 	No First Data Representations or Warranties	  	20	
SECTION 7.2	 	No Western Union Representations or Warranties	  	20	
	
ARTICLE VIII
CERTAIN COVENANTS	
			
SECTION 8.1	 	Governmental Approvals and Consents; Third Party Consents	  	21	
SECTION 8.2	 	Non-Assignable Contracts	  	21	
SECTION 8.3	 	Further Assurances	  	22	
SECTION 8.4	 	Receipt of Misdirected Assets	  	23	
SECTION 8.5	 	Late Payments	  	23	
SECTION 8.6	 	Certain Business Matters	  	23	
SECTION 8.7	 	Litigation	  	24	
SECTION 8.8	 	Signs; Use of Company Name	  	25	
SECTION 8.9	 	Stock Options Registration Statement	  	26	
	
ARTICLE IX	
CONDITIONS TO THE DISTRIBUTION	
			
SECTION 9.1	 	Conditions to the Distribution	  	26	
SECTION 9.2	 	First Data Right Not to Close or to Terminate	  	28	
	
ARTICLE X	
INSURANCE MATTERS	
			
SECTION 10.1	 	Insurance Prior to the Distribution Date	  	28	
SECTION 10.2	 	Ownership of Existing Policies and Programs	  	28	
SECTION 10.3	 	Maintenance of Insurance for Western Union	  	28	
SECTION 10.4	 	Acquisition and Maintenance of Post-Distribution Insurance by Western Union	  	28	
SECTION 10.5	 	Rights Under Shared Policies	  	29	
SECTION 10.6	 	Administration and Reserves	  	30	
SECTION 10.7	 	Insurance Premiums	  	31	
SECTION 10.8	 	Agreement for Waiver of Conflict and Shared Defense	  	31	
SECTION 10.9	 	Duty to Mitigate Settlements	  	31	
SECTION 10.10	 	Non-Waiver of Rights to Coverage	  	31	
	
ARTICLE XI
EXPENSES	
			
SECTION 11.1	 	Expenses Incurred On or Prior To the Distribution Date	  	31	
SECTION 11.2	 	Expenses Incurred or Accrued After the Distribution Date	  	32	
	
ARTICLE XII	
INDEMNIFICATION	
			
SECTION 12.1	 	Release of Pre-Distribution Claims.	  	32	
SECTION 12.2	 	Indemnification by Western Union	  	34	
 
ii

					
 	 	 	  	Page	
SECTION 12.3	 	Indemnification by First Data	  	35	
SECTION 12.4	 	Applicability of and Limitation on Indemnification	  	36	
SECTION 12.5	 	Adjustment of Indemnifiable Losses.	  	36	
SECTION 12.6	 	Procedures for Indemnification of Third Party Claims.	  	37	
SECTION 12.7	 	Procedures for Indemnification of Direct Claims	  	39	
SECTION 12.8	 	Contribution	  	40	
SECTION 12.9	 	Remedies Cumulative	  	40	
SECTION 12.10	 	Survival	  	40	
	
ARTICLE XIII
DISPUTE RESOLUTION	
			
SECTION 13.1	 	Agreement to Arbitrate	  	40	
SECTION 13.2	 	Escalation and Mediation	  	41	
SECTION 13.3	 	Procedures for Arbitration	  	41	
SECTION 13.4	 	Selection of Arbitrator(s)	  	42	
SECTION 13.5	 	Hearings	  	42	
SECTION 13.6	 	Discovery and Certain Other Matters	  	43	
SECTION 13.7	 	Certain Additional Matters	  	44	
SECTION 13.8	 	Continuity of Service and Performance	  	44	
SECTION 13.9	 	Law Governing Arbitration Procedures	  	44	
SECTION 13.10	 	Choice of Forum	  	45	
	
ARTICLE XIV
ACCESS TO INFORMATION AND SERVICES	
			
SECTION 14.1	 	Agreement for Exchange of Information	  	45	
SECTION 14.2	 	Ownership of Information	  	46	
SECTION 14.3	 	Compensation for Providing Information	  	46	
SECTION 14.4	 	Retention of Records	  	46	
SECTION 14.5	 	Limitation of Liability	  	46	
SECTION 14.6	 	Production of Witnesses	  	46	
SECTION 14.7	 	Sharing of Knowledge	  	47	
SECTION 14.8	 	Confidentiality	  	47	
SECTION 14.9	 	Privileged Matters	  	50	
SECTION 14.10	 	Attorney Representation	  	51	
SECTION 14.11	 	Financial Information Certifications	  	51	
	
ARTICLE XV
MISCELLANEOUS	
			
SECTION 15.1	 	Entire Agreement	  	52	
SECTION 15.2	 	Choice of Law	  	52	
SECTION 15.3	 	Amendment	  	52	
SECTION 15.4	 	Waiver	  	52	
SECTION 15.5	 	Partial Invalidity	  	52	
SECTION 15.6	 	Execution in Counterparts	  	52	
SECTION 15.7	 	Successors and Assigns	  	52	
 
iii

					
 	 	 	  	Page	
SECTION 15.8	 	Third Party Beneficiaries	  	53	
SECTION 15.9	 	Notices	  	53	
SECTION 15.10	 	Performance	  	53	
SECTION 15.11	 	Force Majeure	  	53	
SECTION 15.12	 	No Public Announcement	  	54	
SECTION 15.13	 	Termination	  	54	
SECTION 15.14	 	Limited Liability	  	54	
SECTION 15.15	 	Mutual Drafting	  	54	
 
iv

EXHIBITS

Exhibit A	 	Form of Employee Matters Agreement	
Exhibit B	 	First Data Balance Sheet	
Exhibit C	 	Form of Management Agreement	
Exhibit D	 	Form of Patent Ownership Agreement	
Exhibit E	 	Form of Tax Allocation Agreement	
Exhibit F	 	Form of Transferred Action Assignment and Assumption Agreement	
Exhibit G	 	Form of Transition Services Agreement	
Exhibit H	 	Form of Western Union Amended and Restated Certificate of Incorporation	
Exhibit I	 	Western Union Balance Sheet	

SCHEDULES

Schedule 1.1(A)	 	Commercial Agreements	
Schedule 1.1(B)	 	First Data Financial Instruments	
Schedule 1.1(C)	 	First Data Former Business	
Schedule 1.1(D)	 	Asset Transfer Agreements	
Schedule 1.1(E)	 	Historic First Data Long-Term Debt	
Schedule 1.1(F)	 	Transferred Business Assets	
Schedule 1.1(G)	 	Transferred First Data Business Assets	
Schedule 1.1(H)	 	Western Union Financial Instruments	
Schedule 1.1 (I)	 	Western Union Former Businesses	
Schedule 3.3(D)	 	Western Union Board of Directors	
Schedule 3.4	 	Intercompany Agreements	
Schedule 6.1	 	Certain Conveyancing Instruments	
Schedule 8.7(A)	 	Assumed Actions	
Schedule 8.7(B)	 	Transferred Actions	
Schedule 8.7(C)	 	Certain Actions	
Schedule 11.1(A)	 	Separation Costs	
Schedule 11.1(B)	 	First Data Separation Costs	
Schedule 11.1(C)	 	Western Union Separation Costs	
Schedule 12.1(A)	 	Claims Not Released	
Schedule 12.1(B)	 	Obligations Not Released	
Schedule 12.3(D)	 	First Data Information in Form 10 Registration Statement or Information Statement or Prospectus	
Schedule 12.3(E)	 	First Data Information in Note Offering Registration Statement or Prospectus	
Schedule 12.3(F)	 	First Data Information in Stock Options Registration Statement or Prospectus	

SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT is made as of [              ], 2006 between First Data Corporation, a Delaware corporation (“ First Data ”), and The Western Union Company, a Delaware corporation (“ Western Union ”), and, as of the date hereof, a wholly-owned subsidiary of First Data.
WHEREAS, First Data, through the Western Union Subsidiaries (as hereinafter defined), is engaged in the business of providing consumer to consumer money transfer services, consumer to business payment services, retail money order services and certain prepaid services (the “ Transferred Business ”);
WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to transfer to Western Union (i) the Western Union Subsidiaries and (ii) the Transferred Business Assets (as hereinafter defined);
WHEREAS, in connection with the Contribution (as defined herein), First Data has agreed to transfer, or cause to be transferred, to Western Union such Western Union Subsidiaries and the Transferred Business Assets;
WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to distribute on a pro rata basis to the holders of First Data’s common stock, $0.01 par value per share (“ First Data Common Stock ”), without any consideration being paid by the holders of such First Data Common Stock, all of the outstanding shares of Western Union common stock, $0.01 par value per share (“ Western Union Common Stock ”), owned by First Data as of the Distribution Date (as defined herein);
WHEREAS, for federal income tax purposes, the Contribution and Distribution (as defined herein) are intended to qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “ Code ”); and
WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Contribution and Distribution and certain other agreements that will govern the relationship of First Data and Western Union following the Distribution.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1 :
“ Action ” means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court, grand jury or Governmental Authority.

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person. After the Distribution, Western Union and First Data shall not be deemed to be under common Control for purposes hereof due solely to the fact that Western Union and First Data have common stockholders.
“ Agent ” means Wells Fargo Bank Minnesota, National Association, the distribution agent appointed by First Data to distribute shares of Western Union Common Stock pursuant to the Distribution.
“ Agreement ” means this Separation and Distribution Agreement, as the same may be amended from time to time.
“ Applicable Deadline ” has the meaning set forth in Section 13.3(b) .
“ Arbitration Act ” means the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq .
“ Arbitration Demand Date ” has the meaning set forth in Section 13.3(a) .
“ Arbitration Demand Notice ” has the meaning set forth in Section 13.3(a) .
“ Asset Transfer Agreements ” means the agreements listed on Schedule 1.1 (D)  pursuant to which certain assets related to the Transferred Business will be sold by the applicable First Data Party to the applicable Western Union Party.
“ Assumed Actions ” has the meaning set forth in Section 8.7(a ) .
“ Cash Consideration ” has the meaning set forth in Section 3.3(a) .
“ CESI Holdings ” means CESI Holdings, Inc., a Delaware corporation.
“ Claims Administration ” means the processing of claims made under First Data Policies, including the reporting of claims to the insurance carrier, management and defense of claims, and providing for appropriate releases upon settlement of claims.
“ Claims Made Policies ” has the meaning set forth in Section 10.5(a) .
“ Code ” has the meaning set forth in the Recitals.
“ Commercial Agreements ” means the agreements entered into on or before the Distribution Date regarding the ongoing business and service relationships between the First Data Parties and the Western Union Parties identified on Schedule 1.1(A) .
 
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“ Confidential Information ” means any of the following:
 
 	(a)	any information that is competitively sensitive material or otherwise of value to First Data, Western Union and its or their Subsidiaries and/or Affiliates and not generally known to the public, including, but not limited to, product planning information, marketing strategies, plans, finance, operations, consumer and/or customer relationships, consumer and/or customer profiles, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of First Data, Western Union and its and their Subsidiaries and/or Affiliates and the consumers, customers, clients and suppliers of any of the foregoing;	
 
 	(b)	Confidential Personal Information;	
 
 	(c)	any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords First Data, Western Union and its and their Subsidiaries and/or Affiliates a competitive advantage over its competitors; and	
 
 	(d)	all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, information, and trade secrets, whether or not patentable or copyrightable.	
Confidential Information includes without limitation, all documents, inventions, substances, engineering and laboratory notebooks, drawings, diagrams, computer programs and data, specifications, bills of material, equipment, prototypes and models, and any other tangible manifestation (including data in computer or other digital format) of the foregoing.
“ Confidential Personal Information ” shall mean any information about identifiable individuals (including, without limitation, identifiable consumers or employees or other personnel) which First Data, Western Union and its and their Subsidiaries and/or Affiliates provides access or transfers to the other hereunder or which the other otherwise collects, uses, discloses, processes or otherwise handles in connection with this Agreement or any Transaction Agreement including (without limitation) any (A) information: (i) a consumer provides to First Data, Western Union, its or their Subsidiaries and/or Affiliates and/or its or their employees, agents or contractors to obtain a financial product or service; (ii) about a consumer resulting from any transaction involving a financial product or service between First Data, Western Union, its or their Subsidiaries and/or Affiliates, its or their employees, agents or contractors and a consumer; or (iii) First Data, Western Union, its or their Subsidiaries and/or Affiliates and its or their employees, agents or contractors otherwise obtain about a consumer (directly or indirectly) in connection with providing a financial product or service to that consumer; (B) list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any information of the type described in subsection (A) hereof; and (C) employment and personnel records and related information of First Data, Western Union and its or their Subsidiaries and Affiliates.
“ Consideration ” has the meaning set forth in Section 3.3(a) .
 
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“ Contract ” means any written or oral agreement, undertaking, contract, commitment, lease, license, permit, franchise, concession, deed of trust, contract, note, bond, mortgage, indenture, arrangement or other instrument or obligation.
“ Contribution ” has the meaning set forth in Section 3.3(a) .
“ Control ” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.
“ Conveyancing Instruments ” has the meaning set forth in Section 6.1 .
“ Debt Exchange ” has the meaning set forth in Section 3.1(d).
“ Distributed Companies ” means FDCS Holdings, CESI Holdings, TeleCheck, EBP Re, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, First Data Canada Limited and their respective Subsidiaries (including those formed or acquired after the date hereof).
“ Distribution ” has the meaning set forth in Section 4.5(a) .
“ Distribution Date ” means the date determined by the First Data Board of Directors as the date on which the Distribution shall be effected.
“ Distribution Ratio ” has the meaning set forth in Section 4.5(a) .
“ ECG ” means E Commerce Group, Inc., a New York corporation.
“ Effective Time ” means the time at which the Distribution occurs on the Distribution Date.
“ Eligible First Data Debt ” means principal and interest on (a) all or a portion of the outstanding Historic First Data Long-Term Debt and/or (b) First Data Commercial Paper outstanding on the Distribution Date up to an amount equal to the sum of (i) $700 million plus (ii) Refinancing Commercial Paper.
“ Employee Contract ” means any written agreement or contract between a Party and a current or former employee of any Party.
“ Employee Matters Agreement ” means the Employee Matters Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit A .
“ Escalation Notice ” has the meaning set forth in Section 13.2(a) .
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Exchange Agreement ” has the meaning set forth in Section 3.1(d) .
“ Exchange Bank ” has the meaning set forth in Section 3.1(d) .
 
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“ Expenses ” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).
“ FDCS Holdings ” means First Data Commercial Services Holdings, Inc., a Delaware corporation.
“ FDR ” means First Data Resources Inc., a Delaware corporation.
“ FFMC ” means First Financial Management Corporation, a Georgia corporation.
“ FFMC Note ” has the meaning set forth in Section 3.1(a) .
“ FIFO Basis ” means, with respect to the payment of Unrelated Claims pursuant to the same Shared Policy, the payment in full of each successful claim (regardless of whether a First Data Insured Party or a Western Union Insured Party is the claimant) in the order in which such successful claim is approved by the insurance carrier, until the limit of the applicable Shared Policy is met.
“ First Data ” has the meaning set forth in the first paragraph of this Agreement.
“ First Data Balance Sheet ” means the unaudited consolidated balance sheet of First Data as of                      , 2006 attached hereto as Exhibit B .
“ First Data Business ” means (a) all businesses and operations of the First Data Parties, other than the Western Union Business, and (b) the First Data Former Businesses.
“ First Data Commercial Paper ” means First Data commercial paper and First Data Extendible Commercial Notes.
“ First Data Common Stock ” has the meaning set forth in the Recitals.
“ First Data Extendible Commercial Notes ” means unsecured notes of First Data issued at a discount having an initial redemption date not more than 90 days from the date of issue and a final maturity date of up to 390 days from the date of issue.
“ First Data Financial Instruments ” means all credit facilities, guaranties, foreign currency forward exchange contracts, letters of credit and similar instruments primarily related to the First Data Business under which any Western Union Party has any primary, secondary, contingent, joint, several or other Liability, including those set forth on Schedule 1.1(B) .
“ First Data Former Business ” means the Former Businesses set forth on Schedule 1.1(C) and any Former Business (other than the Western Union Parties, the Transferred Business and the Former Businesses identified on Schedule 1.1(I) ) owned by, in whole or in part, and/or operated by, in whole or in part, any of the First Data Parties.
 
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“ First Data Indemnified Parties ” has the meaning set forth in Section 12.2 .
“ First Data Insured Party ” means any First Data Party that is a named insured, additional named insured or insured under any Shared Policy.
“ First Data Intercompany Notes Payable ” means the payables of the type reflected on the Western Union Balance Sheet as “Notes receivable from affiliated companies” (which, as of              , was in the amount of approximately $              million) owed by one or more First Data Parties to one or more Western Union Subsidiaries incurred at any time prior to the Effective Time.
“ First Data Liabilities ” means, without duplication, (a) all Liabilities of the First Data Parties to the extent based upon or arising out of the First Data Business and the Transferred First Data Business Assets, (b) all Liabilities of the Western Union Parties to the extent based upon or arising out of the First Data Business the Transferred First Data Business Assets, (c) all Liabilities based upon or arising out of the First Data Financial Instruments, (d) all outstanding Liabilities (other than the Western Union Liabilities) included on the First Data Balance Sheet and the notes thereto and all other Liabilities (other than the Western Union Liabilities) that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a consolidated balance sheet of First Data, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Liabilities included on the First Data Balance Sheet.
“ First Data Net Intercompany Payable ” means the payables of the type reflected on the Western Union Balance Sheet as “Receivables from affiliated companies, net” (which, as of              , was in the amount of approximately $              million) owed by one or more First Data Parties to one or more Western Union Parties incurred at any time prior to the Effective Time.
“ First Data Parties ” means First Data and its Subsidiaries (including those formed or acquired after the date hereof), other than the Western Union Parties.
“ First Data Policies ” has the meaning set forth in Section 10.2(a) .
“ Foreign Exchange Rate ” means, with respect to any currency other than United States dollars, as of any date of determination, the rate set forth in the exchange rate section of The Wall Street Journal or, if not published in The Wall Street Journal , then the average of the opening bid and asked rates on such date at which such currency may be exchanged for United States dollars as quoted by JPMorgan Chase Bank (or any successor thereto or other major money center commercial bank agreed to by the Parties hereto).
“ Form 10 Registration Statement ” has the meaning set forth in Section 2.1(a) .
“ Former Business ” means any corporation, partnership, entity, division, business unit or business within the definition of Rule 11-01(d) of Regulation S-X (in each case, including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part).
 
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“ GMT ” means GMT Group, Inc., a Delaware corporation.
“ Governmental Approvals and Consents ” means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.
“ Governmental Authority ” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.
“ Historic First Data Long-Term Debt ” means those certain First Data long-term notes issued prior to January 1, 2006 and set forth on Schedule 1.1(E) .
“ Indemnified Party ” has the meaning set forth in Section 12.5(a) .
“ Indemnifying Party ” has the meaning set forth in Section 12.5(a) .
“ Indemnity Payment ” has the meaning set forth in Section 12.5(a) .
“ Information ” has the meaning set forth in Section 14.1(a) .
“ Information Statement ” has the meaning set forth in Section 2.1(a) .
“ Insured Party ” means a First Data Insured Party or a Western Union Insured Party.
“ Intercompany Agreements ” means any Contract, other than this Agreement and the Operating Agreements, between one or more of the First Data Parties, on the one hand, and one or more of the Western Union Parties, on the other hand, entered into prior to the Distribution.
“ Internal Distribution ” has the meaning set forth in Section 3.1(c) .
“ IPS ” means Integrated Payment Systems Inc., a Delaware corporation.
“ IRS ” means the Internal Revenue Service.
“ Liabilities ” means any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.
“ Losses ” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges.
 
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“ Management Agreement ” means the Retail Money Order Issuance and Management Services Agreement, dated August 14, 2006, between IPS and WUFSI, the form of which is attached hereto as Exhibit C .
“ Merchant Alliance ” means any joint venture (in any form, including in corporate, partnership or limited liability company form) or contractual alliance now or hereafter entered into between a First Data Party and one or more financial institutions or other Persons for the provision of merchant processing services.
“ Merchant Alliance Agreement ” means any contract or agreement between a Western Union Party and a Merchant Alliance.
“ Note Offering ” means the offering under the Note Offering Registration Statement of the Western Union Notes.
“ Note Offering Registration Statement ” means the Registration Statement on Form S-1, as amended and supplemented through the Distribution Date, including all documents incorporated by reference through the Distribution Date, to effect the registration under the Securities Act of the Western Union Notes.
“ NYSE ” means the New York Stock Exchange, Inc.
“ Occurrence Based Policies ” has the meaning set forth in Section 10.5(a) .
“ Operating Agreements ” means the Transaction Agreements and the Commercial Agreements.
“ Out-of-Pocket Expenses ” means Expenses involving a payment to a Third Party (other than an employee of the party making the payment).
“ Party ” means a First Data Party or a Western Union Party, as applicable.
“ Patent Ownership Agreement ” means the Patent Ownership Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit D .
“ Paymap ” means Paymap Inc., a Delaware corporation.
“ Person ” means any individual, corporation, partnership, joint venture, limited liability company, entity, association, joint-stock company, trust, unincorporated organization or Governmental Authority.
“ Personal Information Incident ” shall mean any actual or threatened unauthorized access, acquisition, use, alteration, creation, destruction, loss, theft, copying or disclosure of Confidential Personal Information, including but not limited to user IDs or passwords, regardless of whether such has been encrypted. Personal Information Incidents shall exclude the following to the extent occurring in the normal course of business and not reasonably likely to result in harm to a consumer or customer or misuse of Confidential Personal Information: (a) data input errors that are immediately rectified; and (b) any authorized access, acquisition, use, alteration, creation, destruction, copying or disclosure of Confidential Personal Information.
 
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“ Prime Rate ” means the rate that JPMorgan Chase Bank (or any successor thereto or other major money center commercial bank agreed to by the Parties hereto) announces from time to time as its prime lending rate, as in effect from time to time.
“ Privilege ” has the meaning set forth in Section 14.9(a) .
“ Privileged Information ” has the meaning set forth in Section 14.9(a) .
“ Record Date ” means the date determined by the Board of Directors of First Data as the record date for the Distribution.
“ Refinancing Commercial Paper ” means First Data Commercial Paper outstanding on the Distribution Date having a stated principal amount equal to the amount of First Data Commercial Paper proceeds used to pay principal and/or interest on Historic First Data Long-Term Debt.
“ Related Claims ” means a claim or claims against a Shared Policy made by one or more Western Union Insured Parties, on the one hand, and one or more First Data Insured Parties, on the other hand, filed in connection with Losses suffered by either a Western Union Insured Party or a First Data Insured Party, as the case may be, arising out of the same underlying transaction or series of transactions or event or series of events that have also given rise to Losses suffered by a First Data Insured Party or a Western Union Insured Party, as the case may be, which Losses are the subject of a claim or claims by such Person against a Shared Policy.
“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Shared Policies ” has the meaning set forth in Section 10.5(a) .
“ Stock Options Registration Statement ” means the Registration Statement on Form S-1, as amended and supplemented, including all documents incorporated by reference, to effect the registration under the Securities Act of shares of Western Union Common Stock subject to certain stock options granted to current and former officers, employees, directors and consultants of the First Data Parties pursuant to the Employee Matters Agreement.
“ Subsidiary ” means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or Controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that Person. After the Distribution, First Data and Western Union shall not be deemed to be under common Control for purposes hereof due solely to the fact that First Data and Western Union have common stockholders.
 
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“ Tax Allocation Agreement ” means the Tax Allocation Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit E .
“ TeleCheck ” means TeleCheck International, Inc., a Georgia corporation.
“ Third Party ” means a Person that is not an Affiliate of any Party hereto.
“ Third Party Claim ” has the meaning set forth in Section 12.6(a) .
“ Third Party Consents ” means any material consent, approval or authorization to be obtained from any Person that is not a Governmental Authority.
“ Transaction Agreements ” means the Employee Matters Agreement, the Management Agreement, the Patent Ownership Agreement, the Tax Allocation Agreement, the Transition Services Agreement, the Transferred Action Assignment and Assumption Agreement, the Asset Transfer Agreements and the Conveyancing Instruments.
“ Transferred Action Assignment and Assumption Agreement ” means the Transferred Action Assignment and Assumption Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit F .
“ Transferred Actions ” has the meaning set forth in Section 8.7(b) .
“ Transferred Business Assets ” means, collectively, the assets set forth on Schedule 1.1(F) .
“ Transferred Business ” has the meaning set forth in the Recitals.
“ Transferred First Data Business Assets ” means, collectively, the assets set forth on Schedule 1.1(G) .
“ Transition Services Agreement ” means the Transition Services Agreement, dated the date hereof, between First Data and Western Union, the form of which is attached hereto as Exhibit G .
“ Unrelated Claims ” means a claim or claims against a Shared Policy that is not a Related Claim..
“ Western Union ” has the meaning set forth in the first paragraph of this Agreement.
“ Western Union Amended and Restated Certificate of Incorporation ” means the Amended and Restated Certificate of Incorporation of Western Union, the form of which is attached hereto as Exhibit H .
“ Western Union Balance Sheet ” means the unaudited pro forma combined balance sheet of Western Union as of [              ] and attached hereto as Exhibit I .
 
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“ Western Union Bridge Facility ” means the 364 day bridge facility in the principal amount of $[•] to be entered into by Western Union and drawn upon in the principal amount of $[•] to fund, among other things, the payment of the Cash Consideration.
“ Western Union Business ” means (a) all businesses and operations of the Western Union Parties and (b) the Western Union Former Businesses.
“ Western Union Common Stock ” has the meaning set forth in the recitals.
“ Western Union Credit Facility ” means a $[              ] million credit facility to be entered into by Western Union.
“ Western Union Financial Instruments ” means all credit facilities, guaranties, foreign currency forward exchange contracts, letters of credit and similar instruments primarily related to the Western Union Business under which any First Data Party has any primary, secondary, contingent, joint, several or other Liability, including those set forth on Schedule 1.1(H) .
“ Western Union Former Business ” means the Former Businesses set forth on Schedule 1.1(I) and any Former Business (other than the Former Businesses identified on Schedule 1.1(C) ) owned by, in whole or in part, and/or operated by, in whole or in part, any of the Western Union Parties.
“ Western Union Indemnified Parties ” has the meaning set forth in Section 12.3 .
“ Western Union Insured Party ” means any Western Union Party that is a named insured, additional named insured or insured under any Shared Policy.
“ Western Union Intercompany Notes Payable ” means the payables of the type reflected on the Western Union Balance Sheet as “Notes payable to affiliated companies” (which, as of              , was in the amount of approximately $              million) owed by one or more Western Union Parties to one or more First Data Parties incurred at any time prior to the Effective Time.
“ Western Union Liabilities ” means (a) all Liabilities of the Western Union Parties to the extent based upon or arising out of the Western Union Business and the Transferred Business Assets, (b) all Liabilities of the First Data Parties to the extent based upon or arising out of the Western Union Business and the Transferred Business Assets, (c) all Liabilities based upon or arising out of the Western Union Financial Instruments, (d) all outstanding Liabilities included on the Western Union Balance Sheet and the notes thereto and all other Liabilities that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a consolidated balance sheet of Western Union, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Liabilities included on the Western Union Balance Sheet.
“ Western Union Notes ” means the [•] year notes of Western Union in the aggregate principal amount of $[•] bearing an interest rate of          %, as more fully described in the Note Offering Registration Statement.
 
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“ Western Union Parties ” means Western Union, the Western Union Subsidiaries and any other Subsidiary of Western Union (including those formed or acquired after the date hereof), in each case, other than the Distributed Companies.
“ Western Union Subsidiaries ” means, collectively, ECG, FFMC, GMT, Paymap, WUSI and each Subsidiary of any of the foregoing other than the Distributed Companies.
“ Western Union Share ” means a share of Western Union Common Stock.
“ WUFSI ” means Western Union Financial Services, Inc., a Colorado corporation.
“ WUSI ” means Western Union Services Inc., a Maryland corporation.
SECTION 1.2 Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:
(i) words used in the singular include the plural and words used in the plural include the singular;
(ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;
(iii) reference to any gender includes the other gender;
(iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;
(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
(viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;
 
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(x) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;
(xi) if there is any conflict between the provisions of the body of this Agreement and the Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Schedule;
(xii) if there is any conflict between the provisions of this Agreement and a Transaction Agreement, the provisions of such Transaction Agreement shall control unless explicitly stated otherwise therein;
(xiii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;
(xiv) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and
(xv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.
ARTICLE II
ACTIONS PRIOR TO THE DISTRIBUTION DATE
SECTION 2.1 SEC and Other Securities Filings; Western Union Note Offering . In order to effect the transactions contemplated by Articles III and IV , the First Data Parties and the Western Union Parties shall take the following actions prior to the Distribution Date:
(a) Western Union shall file with the SEC (i) a registration statement under the Exchange Act on Form 10 (including all amendments or supplements thereto, in each case prior to the Distribution Date, the “ Form 10 Registration Statement ”) to effect the registration of the Western Union Common Stock under the Exchange Act, (ii) the Note Offering Registration Statement, and (iii) the Stock Options Registration Statement. The Form 10 Registration Statement will include an information statement to be sent by First Data to its stockholders in connection with the Distribution (as may be amended or supplemented, the “ Information Statement ”). Western Union and First Data shall use their respective commercially reasonable efforts to cause the Form 10 Registration Statement, the Note Offering Registration Statement and the Stock Options Registration Statement to become effective as soon as reasonably practicable. As soon as practicable after the Form 10 Registration Statement becomes effective, First Data shall mail the Information Statement to the holders of record of First Data Common Stock.
 
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(b) In connection with the Distribution:
(i) the Parties shall use their respective commercially reasonable efforts to take all such action as may be necessary or appropriate under state and foreign securities and “blue sky” laws in connection with the transactions contemplated by this Agreement;
(ii) the Parties shall prepare, and Western Union shall file and seek to have approved, an application for the listing of the Western Union Common Stock on the NYSE, subject to official notice of issuance;
(iii) First Data shall give the NYSE notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act; and
(iv) the Parties shall cooperate in preparing, filing with the SEC and causing to become effective any other registration statements or amendments or supplements thereto that are necessary or appropriate in order to effect the transactions contemplated hereby, or to reflect the establishment of, or amendments to, any employee benefit plans contemplated hereby.
SECTION 2.2 Financial Instruments .
(a) Western Union will use its commercially reasonable efforts to take or cause to be taken all actions, and enter into (or cause the other Western Union Parties to enter into) such agreements and arrangements, as shall be necessary to cause, as of the Effective Time, (i) the removal of the First Data Parties from all Western Union Financial Instruments and (ii) the First Data Parties to be fully and unconditionally released from all Liabilities in respect of the Western Union Financial Instruments. It is understood and agreed that all Liabilities in respect of the Western Union Financial Instruments are Western Union Liabilities and Western Union shall indemnify the First Data Parties from any Liabilities suffered thereby arising out of, resulting from or relating to the Western Union Financial Instruments. Without limiting the foregoing, after the Effective Time, (A) Western Union will not, and will not permit any Western Union Party to, renew, extend, modify, amend or supplement any Western Union Financial Instrument in any manner that would increase, extend or give rise to any Liability of a First Data Party under such Western Union Financial Instrument and (B) with respect to any Western Union Financial Instrument for which any First Data Party was not removed and fully and unconditionally released from all Liabilities in respect of such Western Union Financial Instrument prior to the Effective Time, Western Union shall continue to use its reasonable best efforts to cause such removal and release.
(b) First Data will use its commercially reasonable efforts to take or cause to be taken all actions, and enter into (or cause the other First Data Parties to enter into) such agreements and arrangements, as shall be necessary to cause, as of the Effective Time, (i) the removal of the Western Union Parties from all First Data Financial Instruments and (ii) the Western Union Parties to be fully and unconditionally released from all Liabilities in respect of the First Data Financial Instruments. It is understood and agreed that all Liabilities in respect of the First Data Financial Instruments are First Data Liabilities and First Data shall indemnify the Western Union Parties from any Liabilities suffered thereby arising out of, resulting from or relating to the First Data Financial Instruments. Without limiting the foregoing, after the Effective Time, (A) First Data will not, and will not permit any First Data Party to, renew, extend, modify, amend or
 
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supplement any First Data Financial Instrument in any manner that would increase, extend or give rise to any Liability of a Western Union Party under such First Data Financial Instrument and (B) with respect to any First Data Financial Instrument for which any Western Union Party was not removed and fully and unconditionally released from all Liabilities in respect of such First Data Financial Instrument prior to the Effective Time, First Data shall continue to use its reasonable best efforts to cause such removal and release.
ARTICLE III
BUSINESS SEPARATION
SECTION 3.1 Actions Taken Prior to Execution of this Agreement . Prior to the execution of this Agreement, First Data and Western Union took or caused to be taken the following actions in the following order:
(a) FFMC Dividend; GMT Contribution . The board of directors of FFMC, on                      , 2006, in accordance with the articles of incorporation and bylaws of FFMC and the Georgia Business Corporation Code, declared a dividend to First Data, as the sole stockholder of FFMC as of the                      , 2006 record date of the dividend, in the amount of $              , and caused the dividend amount to be paid to First Data on such record date by execution and delivery of a promissory note (the “ FFMC Note ” ). Concurrently with the distribution of the FFMC Note described in this Section 3.1(a) , First Data contributed all of its right, title and interest in and to the issued and outstanding shares of capital stock of GMT to FFMC.
(b) FDR Conversion . First Data, on                      , 2006, caused FDR to file a certificate of conversion with the Secretary of State of the State of Delaware converting FDR from a corporation to a limited liability company, which certificate provided that it is effective at the time of the filing thereof.
(c) Internal Distribution Declaration . The board of directors of FFMC, in accordance with the articles of incorporation and bylaws of FFMC and the Georgia Business Corporation Code, declared a dividend to First Data, as the sole stockholder of FFMC as of the                      , 2006 record date of the dividend, of all of FFMC’s right, title and interest in and to the issued and outstanding shares of capital stock of FDCS Holdings (the “ Internal Distribution ”).
(d) Exchange Arrangements . On                      , 2006, First Data, and                      (“ Exchange Bank ”) entered into an exchange agreement (“ Exchange Agreement ” ) regarding the exchange of Eligible First Data Debt having an aggregate fair market value equal to the amount set forth in the Exchange Agreement (the “ Debt Exchange ” ). On                      , 2006, First Data, Western Union and Exchange Bank entered into an underwriting agreement which established the terms upon which the Western Union Notes will be sold to the purchasers thereof and which provides for a closing date that is the same day as the Distribution Date.
(e) Asset Transfer Agreements . On                      , the applicable First Data Parties and the applicable Western Union Parties entered into the Asset Transfer Agreements.
 
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SECTION 3.2 Actions Prior to the Separation . Subject to the terms and conditions of this Agreement, on the Distribution Date but prior to the Distribution, First Data and Western Union shall take or cause to be taken the following actions in the following order:
(a) Internal Contribution . First Data, on                      , 2006, caused FFMC to contribute all of its right, title and interest in and to the issued and outstanding shares of capital stock of each of CESI, TeleCheck, EBP Re, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, and First Data Canada Limited and all of FFMC’s right, title and interest in and to the Transferred First Data Business Assets (which, prior to such date, to the extent necessary to complete the contribution, were transferred by the applicable Western Union Party to FFMC) to FDCS Holdings, and in consideration therefor and simultaneously therewith FDCS Holdings issued to FFMC 100 fully paid, nonassessable shares of common stock of FDCS Holdings, which shares are free of preemptive rights (the “ Internal Contribution ” ).
(b) Internal Distribution . FFMC shall effect the Internal Distribution by distributing to First Data all of FFMC’s right, title and interest in and to the outstanding shares of common stock of FDCS Holdings.
(c) Western Union Borrowings . Western Union shall borrow $[•] in principal amount under the Western Union Bridge Facility.
(d) Repayment of First Data Intercompany Notes . One or more First Data Parties shall pay to one or more Western Union Parties by wire transfer of immediately available funds to an account specified in writing by a Western Union Party an amount equal to the First Data Intercompany Notes Payable in full satisfaction thereof.
(e) Debt Forgiveness . The Western Union Parties shall forgive the First Data Net Intercompany Payable and the First Data Parties shall forgive the                      .
(f) Repayment of Western Union Intercompany Notes One or more Western Union Parties shall pay to one or more First Data Parties by wire transfer of immediately available funds to an account specified in writing by a First Data Party an amount equal to the Western Union Intercompany Notes Payable in full satisfaction thereof.
SECTION 3.3 The Separation . Subject to the terms and conditions of this Agreement, on the Distribution Date and following the consummation of the transactions to be taken pursuant to Section 3.2 , First Data and Western Union shall take the following actions in the following order:
(a) Western Union Contribution . First Data shall (i) contribute to Western Union all of First Data’s right, title and interest in and to the issued and outstanding shares of capital stock of each of FFMC, ECG, Paymap and WUSI and (ii) contribute to Western Union all of First Data’s right, title and interest in and to the Transferred Business Assets (which, prior to such date, to the extent necessary to complete the contribution, were transferred by the applicable First Data Party to First Data) and simultaneously therewith and in consideration therefor Western Union shall (A) pay to First Data by wire transfer of immediately available funds to an account described in Section 5.1(d) and specified in writing by First Data an amount equal to $              (the “ Cash Consideration ”), (B) deliver to First Data the Western Union
 
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Notes, and (C) deliver to First Data a number of uncertificated Western Union Shares which, together with the Western Union Shares held by First Data, shall equal the number of Western Union Shares to be distributed by First Data in the Distribution, which shares shall be fully paid, nonassessable and free of preemptive rights (the consideration described in clauses (A) , (B)  and (C) , the “ Consideration ”, and the transfers in clauses (i)  and (ii)  in consideration for the Consideration, the “ Contribution ”).
(b) Transaction Agreements . The applicable First Data Parties and the applicable Western Union Parties shall execute and deliver to the other the Transaction Agreements to which they are intended to be a Party, it being understood that, among other things, certain interests in intellectual property shall be assigned by First Data to Western Union pursuant to the terms of the Patent Ownership Agreement.
(c) Commercial Agreements . To the extent not already executed, the applicable First Data Parties and the applicable Western Union Parties shall execute and deliver to the other the Commercial Agreements to which they are intended to be a Party
(d) Western Union Board . The Board of Directors of Western Union shall be reconstituted so that it consists of the persons set forth on Schedule 3.3(D) .
Notwithstanding the foregoing, First Data may elect in its sole and absolute discretion at any time prior to the Distribution to omit or modify any of the transactions set forth in Sections 3.2 through 3.3 or to include additional transactions.
SECTION 3.4 Termination of Existing Intercompany Agreements . Except as otherwise expressly provided in this Agreement, the Operating Agreements, Merchant Alliance Agreements or as set forth on Schedule 3.4 and except for all payables and receivables accrued and unpaid in the ordinary course of business of the First Data Parties and the Western Union Parties pursuant to the Commercial Agreements prior to the Effective Time, all Intercompany Agreements and all other intercompany arrangements and course of dealings, whether or not in writing and whether or not binding, in effect immediately prior to the Distribution, shall be terminated and be of no further force and effect from and after the Distribution; provided that, for the avoidance of doubt, this Section 3.4 shall not terminate or affect this Agreement, any Operating Agreement or any Merchant Alliance Agreement.
ARTICLE IV
THE DISTRIBUTION
SECTION 4.1 Record Date and Distribution Date . Subject to the terms and conditions of this Agreement, the Board of Directors of First Data shall, in its sole and absolute discretion, establish the Record Date and the Distribution Date and any necessary or appropriate procedures in connection with the Distribution. The Board of Directors of First Data shall have the right to adjust the Distribution Ratio at any time prior to the Distribution.
SECTION 4.2 Increase In Western Union Authorized Shares . Prior to the Contribution, the Western Union Board of Directors and First Data, as sole stockholder of Western Union, shall have adopted the Western Union Amended and Restated Certificate of Incorporation and Western Union shall have filed the Western Union Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
 
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SECTION 4.3 The Agent . Prior to the Distribution Date, First Data will enter into a distribution agent agreement with the Agent.
SECTION 4.4 Delivery of Western Union Shares . First Data shall take such steps as are necessary or appropriate to permit the Western Union Shares to be distributed in the manner described in this Article IV . In its capacity as First Data’s distribution agent and Western Union’s transfer agent, the Agent will distribute the Western Union Shares in the manner described in this Article IV .
SECTION 4.5 The Distribution . (a) Subject to the satisfaction or waiver of the conditions set forth in Section 9.1 and at the sole and absolute discretion of First Data, on the Distribution Date First Data shall cause the Agent to distribute to each holder of record of shares of First Data Common Stock as of the Record Date (or, if such holder has sold its shares of First Data Common Stock in the regular way market prior to the Distribution, to the transferee of such shares) by means of a pro rata dividend of one Western Union Share for each share of First Data Common Stock (the “ Distribution Ratio ”) held of record by such holder (or such transferee) as of the Record Date (the “ Distribution ”).
(b) Subject to the terms and conditions of this Agreement, each holder of record of First Data Common Stock as of the Record Date (or such holder’s designated transferee) will be entitled to receive in the Distribution one share of Western Union Common Stock for each share of First Data Common Stock held of record by such record holder (or such transferee) as of the Record Date.
SECTION 4.6 Delivery of Western Union Shares . Each distributed Western Union Share shall be validly issued, fully paid and nonassessable and free of preemptive rights. The shares of Western Union Common Stock distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system. No certificates therefor shall be distributed. First Data shall cause the Agent to deliver an account statement to each holder of Western Union Common Stock reflecting such holder’s ownership interest in shares of Western Union Common Stock.
SECTION 4.7 Distribution is at First Data’s Discretion . The consummation of the transactions provided for in this Article IV shall only be effected after the Distribution has been declared by the Board of Directors of First Data and after all of the conditions set forth in Section 9.1 shall have been satisfied or waived by First Data. Notwithstanding the foregoing, at any time prior to the Distribution, First Data, in its sole and absolute discretion, may determine not to consummate the Distribution.
SECTION 4.8 Additional Approvals . First Data shall cooperate with Western Union in effecting, and if so requested by Western Union, First Data shall, as the sole stockholder of Western Union prior to the Distribution, ratify any actions which are reasonably necessary or desirable to be taken by Western Union to effectuate the transactions referenced in or contemplated by this Agreement in a manner consistent with the terms hereof, including the
 
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preparation and implementation of appropriate plans, agreements and arrangements for employees of the Western Union Business and non-employee members of Western Union’s Board of Directors.
ARTICLE V
ACTIONS SUBSEQUENT TO THE DISTRIBUTION
SECTION 5.1 Actions Following the Distribution . On the Distribution Date and promptly following the consummation of the Distribution, the following transactions shall be undertaken:
(a) FFMC Debt Financing. FFMC shall enter into one or more financing agreements and, in connection with such agreements, borrow a sufficient amount of cash to comply with its obligations pursuant to Section 5.1(b) .
(b) Satisfaction of FFMC Note . FFMC shall pay to First Data by wire transfer of immediately available funds to an account specified in writing by First Data an amount equal to the outstanding principal amount of the FFMC Note in full satisfaction thereof.
(c) Debt Exchange and Note Offering . Pursuant to the Exchange Agreement, First Data will transfer the Western Union Notes to the Exchange Bank in exchange for all or a portion of the Eligible First Data Debt. First Data and Western Union shall use their respective reasonable best efforts to cause the Debt Exchange and the Note Offering to be consummated on the Distribution Date. Without limiting the generality of the foregoing, each of First Data and Western Union shall use its reasonable best efforts to cause their respective employees, accountants, counsel and other representatives to reasonably cooperate with each other in carrying out the transactions contemplated by the Debt Exchange and the Note Offering and in delivering all documents and instruments deemed reasonably necessary by First Data and Western Union and otherwise cooperating and assisting in satisfying the conditions of the Debt Exchange and the Note Offering.
(d) Paydown of First Data Debt . First Data agrees (i) subject to the payment of indebtedness of the First Data Parties in accordance with this Section 5.1(d) , to maintain the Cash Consideration in a separate, interest-bearing account from all other cash and cash equivalents of the First Data Parties, (ii) not to commingle the Cash Consideration with any other assets owned or held by First Data and (iii) to, not later than one year following the Distribution Date, use all of the Cash Consideration plus all earnings on any amounts held in such account solely to repay Eligible First Data Debt.
ARTICLE VI
BUSINESS SEPARATION CLOSING MATTERS
SECTION 6.1 Delivery of Instruments of Conveyance . In order to effectuate the transactions contemplated by Articles II through IV , the Parties shall execute and deliver, or cause to be executed and delivered, prior to or as of the Distribution such deeds, bills of sale, instruments of assumption, instruments of assignment, stock powers, certificates of title and other instruments of assignment, transfer, assumption, license and conveyance (collectively, the “ Conveyancing Instruments ”) as First Data and Western Union shall reasonably deem necessary or appropriate to effect such transactions, including the Asset Transfer Agreements and those set forth on Schedule 6.1 .
 
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SECTION 6.2 Provision of Corporate Records . (a) Without limitation of the Parties rights and obligations pursuant to Article XIV , prior to or as promptly as reasonably practicable after the Distribution, First Data shall deliver to Western Union all corporate books and records of the Western Union Parties and, upon request, copies of all corporate books and records of the First Data Parties relating to the Western Union Business in its possession or control, including in each case all active agreements, litigation files and government filings.
(b) Without limitation of the Parties rights and obligations pursuant to Article XIV , prior to or as promptly as reasonably practicable after the Distribution, Western Union shall deliver to First Data all corporate books and records of the First Data Parties and, upon request, copies of all corporate books and records of the Western Union Parties relating to the First Data Business in its possession or control, including in each case all active agreements, litigation files and government filings.
ARTICLE VII
NO REPRESENTATIONS AND WARRANTIES
SECTION 7.1 No First Data Representations or Warranties . Except as expressly set forth herein or in any Operating Agreement, none of the First Data Parties represents or warrants in any way (a) as to the value, condition, prospects or freedom from encumbrance of, or any other matter concerning, any of the Western Union Subsidiaries (including their respective assets), the Transferred Business Assets or the Western Union Business, (b) as to the legal sufficiency to convey title to any of the Western Union Subsidiaries or Transferred Business Assets on the execution, delivery and filing of the Conveyancing Instruments or (c) the amount or nature of, or any other matter concerning, the Liabilities of the Western Union Parties. THE WESTERN UNION BUSINESS AND ALL SUCH WESTERN UNION SUBSIDIARIES (AND THEIR RESPECTIVE ASSETS) AND TRANSFERRED ASSETS ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the Western Union Parties shall bear the economic and legal risks that any conveyances of such assets shall prove to be insufficient or that the Western Union Parties’ title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Operating Agreement, none of the First Data Parties represents or warrants that the obtaining of the consents or approvals, the execution and delivery of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments and, subject to Section 7.2 , the Western Union Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with with respect to the Contribution.
SECTION 7.2 No Western Union Representations or Warranties . Except as expressly set forth herein or in any Operating Agreement, none of the Western Union Parties
 
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represents or warrants in any way (a) as to the value or freedom from encumbrance of, or any other matter concerning, any of the Distributed Companies (including their respective assets), the Transferred First Data Business Assets or the First Data Business, (b) as to the legal sufficiency to convey title to any of the Distributed Companies or the Transferred First Data Business Assets on the execution, delivery and filing of the Conveyancing Instruments or (c) the amount or nature of, or any other matter concerning, the Liabilities of the Distributed Companies. THE DISTRIBUTED COMPANIES (AND THEIR RESPECTIVE ASSETS) ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the First Data Parties shall bear the economic and legal risks that any conveyances of such assets shall prove to be insufficient or that the First Data Parties’ title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Operating Agreement, solely with respect to the FFMC Distribution, none of the Western Union Parties represents or warrants that the obtaining of the consents or approvals, the execution and delivery of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments and, subject to Section 7.1 , the First Data Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with with respect to the FFMC Distribution.
ARTICLE VIII
CERTAIN COVENANTS
SECTION 8.1 Governmental Approvals and Consents; Third Party Consents . Prior to the Distribution, the Parties hereto will use their respective commercially reasonable efforts to obtain all Governmental Approvals and Consents and all Third Party Consents that are required or appropriate in connection with the transactions contemplated by this Agreement.
SECTION 8.2 Non-Assignable Contracts . (a) If and to the extent that any First Data Party is unable to obtain any consent, approval or amendment necessary for the transfer or assignment to any Western Union Party of any Contract or other rights relating to the Western Union Business that would otherwise be transferred or assigned to such Western Union Party as contemplated by this Agreement or any other agreement or document contemplated hereby, (i) such First Data Party shall continue to be bound thereby and the purported transfer or assignment to such Western Union Party shall automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained and (ii) unless not permitted by the terms thereof or by law, the Western Union Parties shall pay, perform and discharge fully all of the obligations of the First Data Parties thereunder from and after the Distribution, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the First Data Parties for all Losses arising out of such performance by such Western Union Party. The First Data Parties shall, without further consideration therefor, pay and remit to the applicable Western Union Party promptly all monies, rights and other considerations received in respect of such performance. The First Data Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and
 
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documents referred to in this Section 8.2(a) only as reasonably directed by Western Union and at Western Union’s expense. If and when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the First Data Parties shall promptly assign or transfer and novate (to the extent permissible) all of their rights and obligations thereunder to the applicable Western Union Party without payment of further consideration, and the Western Union Party shall, without the payment of any further consideration therefor, assume such rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 8.2(a) is prohibited by law or the terms thereof, this Section 8.2(a) shall operate to create a subcontract with the applicable Western Union Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the First Data Parties with respect to the performance by such Western Union Party.
(b) If and to the extent that any Western Union Party is unable to obtain any consent, approval or amendment necessary for the transfer or assignment to any First Data Party of any Contract or other rights relating to the First Data Business that would otherwise be transferred or assigned to such First Data Party as contemplated by this Agreement or any other agreement or document contemplated hereby, (i) such Western Union Party shall continue to be bound thereby and the purported transfer or assignment to such First Data Party shall automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained and (ii) unless not permitted by the terms thereof or by law, the First Data Parties shall pay, perform and discharge fully all of the obligations of the Western Union Parties thereunder from and after the Distribution, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the Western Union Parties for all indemnifiable Losses arising out of such performance by such First Data Party. The Western Union Parties shall, without further consideration therefor, pay and remit to the applicable First Data Party promptly all monies, rights and other considerations received in respect of such performance. The Western Union Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and documents referred to in this Section 8.2(b) only as reasonably directed by First Data and at First Data’s expense. If and when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the Western Union Parties shall promptly assign or transfer and novate (to the extent permissible) all of their rights and obligations thereunder to the applicable First Data Party without payment of further consideration, and the First Data Party shall, without the payment of any further consideration therefor, assume such rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 8.2(b) is prohibited by law or the terms thereof, this Section 8.2(b) shall operate to create a subcontract with the applicable First Data Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the Western Union Parties with respect to the performance by such First Data Party.
SECTION 8.3 Further Assurances . (a) Each Party shall use its commercially reasonable efforts, after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary or advisable under applicable laws to consummate or make effective the transactions contemplated by this Agreement; provided , however , that no First Data Party or Western Union Party shall be obligated under this Section 8.3(a) to pay any consideration, grant any concession or incur any Liability to any third Person.
 
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(b) If, as a result of mistake or oversight, any asset or Contract reasonably necessary to the conduct of the Western Union Business is not transferred to the applicable Western Union Party, or any asset or Contract reasonably necessary to the conduct of the First Data Business is not transferred to the applicable First Data Party or is transferred to any Western Union Party, the Parties intend that such asset or Contract shall be transferred to the Party which requires such asset or Contract for the conduct of its business without the payment of any additional consideration, and First Data and Western Union shall negotiate in good faith after the Distribution to determine whether, notwithstanding such intent, such asset or Contract should not be transferred to a Western Union Party or to a First Data Party, as the case may be, and/or the terms and conditions upon which such asset or Contract shall be made available to a Western Union Party or to a First Data Party, as the case may be. Unless expressly provided to the contrary in this Agreement or any Operating Agreement, if, as a result of mistake or oversight, any Western Union Liability is retained or assumed by any First Data Party, or any First Data Liability is retained or assumed by any Western Union Party, the Parties intend that such Liability shall be transferred to the Party with respect to which such Liability relates without the payment of any additional consideration, and First Data and Western Union shall negotiate in good faith after the Distribution to determine whether, notwithstanding such intent, such Liability should not be transferred to a Western Union Party or a First Data Party, as the case may be, and/or the terms and conditions upon which any such Liability shall be transferred. Notwithstanding anything to the contrary in this Section 8.3(b) , no First Data Party or Western Union Party shall be obligated under this Section 8.3(b) to pay any consideration, grant any concession or incur any Liability to any third Person other than the Liability to be transferred.
SECTION 8.4 Receipt of Misdirected Assets . In the event that at any time and from time to time after the Effective Time, any First Data Party shall receive from a Third Party an asset of the Western Union Business (including any remittances from account debtors in respect of the Western Union Business), such Party shall promptly transfer such asset to the appropriate Western Union Party. In the event that at any time and from time to time after the Effective Time, any Western Union Party shall receive from a Third Party an asset of the First Data Business (including any remittances from account debtors in respect of the First Data Business), such Party shall promptly transfer such asset to the appropriate First Data Party. Each Party shall cooperate with the other Party and use its commercially reasonable efforts to set up procedures and notifications as are reasonably necessary or advisable to effectuate the transfers contemplated by this Section 8.4 .
SECTION 8.5 Late Payments . Except as expressly provided to the contrary in this Agreement or in any Operating Agreement, any amount not paid when due pursuant to this Agreement or any Operating Agreement (and any amounts billed or otherwise invoiced or demanded in writing and properly payable that are not paid within 30 days of the date of such bill, invoice or other written demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.
SECTION 8.6 Certain Business Matters. (a) Following the Effective Time and except as set forth in any Operating Agreement, either Party may (i) engage in the same or similar
 
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activities or lines of business as the other Party is or in the future may be engaged in and/or (ii) do business, or refrain from doing business, with any potential or actual supplier or customer of the other Party.
(b) Each Party agrees that, for a period of six months from the Distribution Date, such Party (a “ Soliciting Party” ) will not solicit for employment any employee of the other Party (a “ Protected Party ” ), provided , however , that it is understood that this employee non-solicitation provision shall not prohibit: (i) generalized solicitations by advertising and the like, which are not directed to specific individuals or employees of the Protected Party; (ii) solicitations of persons whose employment was terminated by the Protected Party; or (iii) solicitations of persons who have terminated their employment with the Protected Party without any prior solicitation by the Soliciting Party, and, provided further , that the restrictions on solicitation set forth in this Section 8.6(b) shall not apply to any Merchant Alliance.
SECTION 8.7 Litigation . (a) As of the Distribution, the Western Union Parties shall assume and thereafter, except as provided in Article XII , be responsible for all Liabilities that may result from the Assumed Actions and all fees and costs relating to the defense of the Assumed Actions, including attorneys’ fees and costs incurred after the Distribution. “ Assumed Actions ” means those Actions (in which any First Data Party or any Affiliate of a First Data Party, other than any Western Union Party, is a defendant or the Party against whom the claim or investigation is directed) primarily relating to the Western Union Business, including those listed on Schedule 8.7(A) .
(b) The First Data Parties shall transfer the Transferred Actions to Western Union, and Western Union shall receive and have the benefit of all of the proceeds of such Transferred Actions. “ Transferred Actions ” means those Actions (in which any First Data Party or any of its Affiliates is a plaintiff or claimant) primarily relating to the Western Union Business, including those listed on Schedule 8.7(B) pursuant to the Transferred Action Assignment and Assumption Agreement.
(c)      (i) First Data agrees that at all times from and after the Distribution if an Action relating primarily to the First Data Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then First Data shall use its commercially reasonable efforts to cause Western Union to be removed from such Action; provided that if First Data is unable to cause Western Union to be removed from such Action, First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.
(ii) Western Union agrees that at all times from and after the Distribution if an Action relating primarily to the Western Union Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then Western Union shall use its commercially reasonable efforts to cause First Data to be removed from such Action; provided that if Western Union is unable to cause First Data to be removed from such Action, First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.
 
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(iii) First Data and Western Union agree that at all times from and after the Distribution if an Action which does not relate primarily to the Western Union Business or the First Data Business is commenced by a Third Party naming both First Data and Western Union as defendants thereto, then First Data and Western Union shall cooperate and consult to the extent necessary or advisable with respect to such Action.
(iv) Without limiting the generality of the foregoing, with respect to the Actions identified on Schedule 8.7(C) , First Data shall have the right to negotiate, settle and compromise such Actions on behalf of both all First Data Parties and all Western Union Parties, provided that, except to the extent First Data settles and compromises such Actions within the scope of the authorization set forth in Schedule 8.7(C) , First Data shall not settle or compromise such Actions with respect to the portion of such Actions which would constitute a Western Union Liability without the written consent of Western Union. Western Union agrees to reimburse First Data for its proportionate share of First Data’s Out-of-Pocket Expenses incurred in connection with such Actions, determined by dividing the amount of Western Union Liability with respect to such Actions by the sum of the amount of First Data Liability and Western Union Liability arising from such Actions.
SECTION 8.8 Signs; Use of Company Name . (a) Except as provided in the Operating Agreements, on or prior to 180 days after Distribution Date, the Parties hereto, at the expense of the Party which owns the tangible assets, shall remove (or, if necessary, on an interim basis cover up) any and all exterior and interior signs and identifiers on assets or properties owned or held by the Western Union Parties that refer or pertain to any First Data Party or the First Data Business, or on assets or properties owned or held by the First Data Parties that refer or pertain to any Western Union Party or the Western Union Business. Western Union hereby grants to the First Data Parties and First Data hereby grants to the Western Union Parties for a period of 180 days following the Distribution Date, a non-exclusive, non-transferable, fully-paid and royalty-free license to use their respective corporate names (the “ Marks” ) on stationery and signage used in their respective businesses as of the Effective Time. Notwithstanding the foregoing, First Data and Western Union shall use reasonable efforts to change all references to the other Party’s Marks as soon as practicable following the Effective Time.
(b) Except as provided in the Operating Agreements, after 180 days following the Effective Time, (1) without the prior written consent of First Data, the Western Union Parties shall not use or display the name First Data, or any variations thereof, or other trademarks, any trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any First Data Party that have not been assigned or licensed to a Western Union Party, and (ii) without the prior written consent of Western Union, the First Data Parties shall not use or display the name Western Union or any variations thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any Western Union Party that have not been assigned or licensed to a First Data Party; provided , however , that notwithstanding the foregoing, nothing contained in this Agreement shall prevent either Party hereto from using the other’s name in public filings with Governmental Authorities, materials intended for distribution to either Party’s stockholders or any other communication in any medium that describes the relationship between the Parties, including materials distributed to employees relating to the transition of employee benefit plans; and, provided further, that the continuation of references to the Marks in telephone directories (and other similar third Party or
 
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incidental uses which are not capable of being updated within the time period set forth above) for a period not to exceed one year following the Effective Time shall not be deemed a breach of this Section 8.8 .
SECTION 8.9 Stock Options Registration Statement . Western Union shall prepare and file with the SEC such amendments and supplements to the Stock Options Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Stock Options Registration Statement effective under the Securities Act for a period of not less than ten (10) years following the Distribution Date, provided that, Western Union’s obligations pursuant to this Section 8.9 shall terminate on the date upon which there are no further securities covered thereby which may be issued pursuant to the terms of the applicable stock option agreements.
ARTICLE IX
CONDITIONS TO THE DISTRIBUTION
SECTION 9.1 Conditions to the Distribution . The obligation of First Data to effect the Distribution is subject to the satisfaction or the waiver by First Data, in its sole and absolute discretion, of each of the following conditions:
(a) Approval by the First Data Board of Directors . This Agreement and the transactions contemplated hereby, including the declaration of the Distribution, shall have been duly approved by the Board of Directors of First Data in accordance with applicable law and the Second Amended and Restated Certificate of Incorporation and By-laws of First Data.
(b) Receipt of IRS Private Letter Ruling and Opinion . First Data shall have received (i) a private letter ruling from the IRS (which shall not have been revoked or modified in any material respect) and (ii) an opinion of Sidley Austin LLP (or other nationally recognized tax counsel), in each case in form and substance satisfactory to First Data, to the effect that, among other things, the Contribution followed by the Distribution, taken together, will be tax-free to First Data, Western Union and holders of First Data Common Stock for United States federal income tax purposes under Sections 355, 368 and related provisions of the Code.
(c) Receipt of Solvency Conveyance Opinion . An independent firm acceptable to First Data, in its sole and absolute discretion, shall have delivered one or more opinions to the Board of Directors of each of First Data and Western Union confirming the solvency and financial viability of Western Union and First Data, which opinions shall be in form and substance satisfactory to First Data, in its sole and absolute discretion, and shall not have been withdrawn or rescinded.
(d) State and Foreign Securities and “Blue Sky” Laws Approvals . First Data and Western Union shall have received all permits, registrations and consents required under the securities or “blue sky” laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the Distribution.
(e) SEC Filings and Approvals . The Parties shall have prepared and Western Union shall, to the extent required under applicable law, have filed with the SEC any such documentation that First Data determines, in its sole and absolute discretion, is necessary or
 
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desirable to effectuate the Distribution and the other transactions contemplated by this Agreement and the Operating Agreements, and each Party shall have obtained all necessary approvals from the SEC.
(f) Effectiveness of Registration Statements; No Stop Order . The SEC shall have declared effective the Form 10 Registration Statement, the Note Offering Registration Statement and the Stock Options Registration Statement, and no stop order suspending the effectiveness of the Form 10 Registration Statement, the Note Offering Registration Statement and the Stock Options Registration Statement shall be in effect or, to the knowledge of either First Data or Western Union, threatened by the SEC.
(g) Permits . First Data and Western Union shall have received all material Governmental Approvals and Consents and all material permits, registrations, clearances and consents from Third Parties, in each case, necessary to effect the Distribution and permit the operation of the Western Union Business thereafter.
(h) Dissemination of Information to First Data Stockholders . Prior to the Distribution, the Parties shall have prepared and mailed to the holders of record of First Data Common Stock such information concerning Western Union, its business, operations and management, the Distribution and such other matters as First Data shall determine in its sole and absolute discretion and as may otherwise be required by law.
(i) Approval of NYSE Listing Application . The NYSE shall have approved the Western Union Common Stock for listing, subject to official notice of issuance.
(j) Resignations . Prior to the Distribution, all of First Data’s representatives or designees shall have resigned or been removed as officers and from all Boards of Directors or similar governing bodies of the Western Union Parties, and all of Western Union’s representatives or designees shall have resigned or been removed as officers and from all Boards of Directors or similar governing bodies of the First Data Parties.
(k) Consents . First Data and Western Union shall have received all Governmental Approvals and Consents and all Third Party Consents necessary to effect the Contribution and the Distribution and to permit the operation of the Western Union Business after the Distribution Date.
(l) No Legal Restraint . No order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution or any of the transactions related thereto, including the Contribution, shall be in effect.
(m) Consummation of Pre-Distribution Transactions . The pre-Distribution transactions contemplated by Articles II and III , including the execution and delivery of the Operating Agreements, shall have been consummated.
(n) Credit Ratings . First Data and Western Union shall have each received credit ratings from the credit rating agencies that are satisfactory to First Data in its sole and absolute discretion.
 
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(o) No Other Events . No other events or developments shall have occurred that, in the judgment of the Board of Directors of First Data, in its sole and absolute discretion, would result in the Contribution or the Distribution having a material adverse effect on First Data or its stockholders.
SECTION 9.2 First Data Right Not to Close or to Terminate . The satisfaction of the foregoing conditions are for the sole benefit of First Data and shall not give rise to or create any duty on the part of First Data or the Board of Directors of First Data to waive or not waive any such condition or to effect the Distribution, or in any way limit First Data’s power of termination set forth in Section 15.13 .
ARTICLE X
INSURANCE MATTERS
SECTION 10.1 Insurance Prior to the Distribution Date . Except as may otherwise be expressly provided in this Article X , Western Union does hereby agree, for itself and on behalf of the Western Union Parties, that the First Data Parties shall not have any Liability whatsoever as a result of the insurance policies, insurance contracts and claim administration contracts and practices related to the foregoing of the First Data Parties in effect at any time prior to the Effective Time, including as a result of the level or scope of any such insurance policies, insurance contracts, claim administration contracts, the creditworthiness of any insurance carrier, the terms and conditions of any policy or contract and the adequacy or timeliness of any notice to any insurance carrier or claims administrator with respect to any actual claim or potential claim or otherwise.
SECTION 10.2 Ownership of Existing Policies and Programs . First Data or one or more of the other First Data Parties shall continue to own all insurance policies, insurance contracts and claim administration contracts of any kind of any First Data Party which were or are in effect at any time at or prior to the Effective Time (other than insurance policies, insurance contracts and claim administration contracts established in contemplation of the Distribution to cover only the Western Union Parties after the Effective Time), including general liability (whether primary, excess or umbrella), fiduciary liability, automobile, aircraft hull and liability, all risk property (including business interruption) and casualty, directors and officers liability, employer’s liability, workers’ compensation, comprehensive crime, errors and omissions and property/boiler and machinery insurance policies, together with all rights, benefits and privileges thereunder (collectively, the “ First Data Policies ”). Subject to the provisions of this Agreement, (a) the First Data Parties shall retain all of their respective rights, benefits and privileges, if any, under the First Data Policies and (b) coverage of the Western Union Parties under the First Data Policies shall cease as of the Effective Time. Nothing contained herein shall be construed to be an attempted assignment of or a change to any part of the ownership of the First Data Policies.
SECTION 10.3 Maintenance of Insurance for Western Union . Until the Effective Time, First Data shall maintain in full force and effect the First Data Policies to the extent that such policies apply to the Western Union Business.
SECTION 10.4 Acquisition and Maintenance of Post-Distribution Insurance by Western Union . Commencing on and as of the Distribution Date, Western Union shall be
 
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responsible for establishing and maintaining separate property damage and business interruption and liability insurance policies and programs (including general liability (whether primary, excess or umbrella), fiduciary liability, automobile, aircraft hull and liability, all risk property (including business interruption) and casualty, directors and officers liability, employer’s liability, workers’ compensation, comprehensive crime, errors and omissions and property/boiler and machinery insurance policies) for activities and claims involving any Western Union Party or any of their Affiliates, in each case with commercially reasonable limits and deductibles or self-insured retentions. Each of the Western Union Parties and each of their Affiliates, as appropriate, shall be responsible for all administrative and financial matters relating to insurance policies established and maintained by the Western Union Parties and each of their Affiliates for claims relating to any period at or after the Effective Time involving any Western Union Party or any of its Affiliates.
SECTION 10.5 Rights Under Shared Policies . (a) At and after the Effective Time: (i) Western Union will have the right to assert claims (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing) for any Losses with respect to the Western Union Business and the Transferred Business Assets under First Data Policies that include any Western Union Party and/or any or all of the Western Union Business within the definition of the named insured, additional named insured, additional insured or insured (excluding, for the avoidance of doubt, any group health and welfare insurance policies) (“ Shared Policies ”) with Third Party insurers that are “occurrence based” insurance policies (“ Occurrence Based Policies ”) arising out of insured occurrences occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Occurrence Based Policies and agreements relating thereto so allow; (ii) Western Union will have the right to continue to prosecute claims with respect to the Western Union Business properly asserted under Occurrence Based Policies prior to the Effective Time to the extent that the terms and conditions of any such Occurrence Based Policies and agreements relating thereto so allow (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing); and (iii) Western Union will have the right to assert and/or continue to prosecute claims with respect to the Western Union Business and the Transferred Business Assets (and First Data will use commercially reasonable efforts to assist Western Union in asserting claims if so requested by Western Union in writing) under Shared Policies with Third Party insurers that are made under liability insurance policies written on a “claims made” basis (“ Claims Made Policies ”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Claims Made Policies and agreements relating thereto so allow; provided , that in the case of clauses (i) , (ii)  and (iii) , (A) all of the First Data Parties’ reasonable Out-of Pocket Expenses incurred in connection with their efforts to assist Western Union in asserting or continuing to prosecute the claims described above are promptly paid by Western Union following receipt of an invoice for such expenses, (B) subject to Section 10.5(b) , the First Data Parties may, at any time, without liability or obligation to the Western Union Parties, amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Shared Policies (and such claims shall be subject to any such amendments, commutations, terminations, buy-outs, extinguishments and modifications), (C) such claims will be subject to (and recovery thereon will be reduced by the amount of) any applicable deductibles, retentions or self-insurance provisions, and, with respect to any such deductibles, retentions or self-insurance
 
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provisions which require a payment by a First Data Party or any Affiliate of a First Data Party in respect thereof, Western Union shall reimburse such First Data Party or Affiliate for such payment, (D) Western Union shall be responsible for and shall pay any claims handling expenses or residual Liability arising from such claims and (E) such claims will be subject to exhaustion of existing sublimits and aggregate limits as provided in Section 10.5(c) . First Data’s obligation to use commercially reasonable efforts to assist Western Union in asserting claims under applicable Shared Policies will include using commercially reasonable efforts to assist Western Union to establish its right to coverage under such Shared Policies (so long as all of the First Data Parties’ Out-of-Pocket Expenses in connection therewith are promptly paid by Western Union). No First Data Party will bear any Liability for the failure of an insurer to pay any claim under any Shared Policy. It is understood that any Claims Made Policies may not provide any coverage to the Western Union Parties for incidents occurring prior to the Effective Time but that are asserted with the insurance carrier after the Effective Time.
(b) In the event that after the Effective Time First Data proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Shared Policies under which Western Union has or may in the future have rights to assert claims pursuant to this Article X in a manner that would adversely affect any such rights of Western Union, (i) First Data will give Western Union prior notice thereof and consult with Western Union with respect to such action, (ii) First Data will not take such action without the prior written consent of Western Union, such consent not to be unreasonably withheld, and (iii) First Data will pay to Western Union its equitable share (which shall be mutually agreed upon by First Data and Western Union, acting reasonably), if any, of any net proceeds actually received by First Data from the insurer under the applicable Shared Policy as a result of such action by First Data (after deducting First Data’s reasonable costs and expenses incurred in connection with such action).
(c) To the extent that the limits of any Shared Policy preclude payment in full of Unrelated Claims filed by First Data and Western Union, the insurance proceeds available under such Shared Policy shall be paid to First Data and/or Western Union on a FIFO Basis. In the event that First Data and Western Union file Related Claims under any Shared Policy, each of First Data and Western Union shall receive a pro rata amount of the available insurance proceeds, based on the relationship the Loss incurred by each such Party bears to the total Loss to both such Parties from the occurrence or event underlying the Related Claims.
SECTION 10.6 Administration and Reserves . (a) From and after the Effective Time, the First Data Parties will be responsible for the Claims Administration with respect to claims of the First Data Parties under Shared Policies.
(b) From and after the Effective Time, the Western Union Parties will be responsible for the Claims Administration with respect to claims of the Western Union Parties under Shared Policies, and First Data shall provide appropriate instructions to the applicable insurance brokers under the Shared Policies to facilitate Claims Administration by Western Union.
(c) Any reserves of the First Data Parties with respect to the Western Union Business shall be transferred to Western Union by such First Data Parties on or prior to the Effective Time.
 
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SECTION 10.7 Insurance Premiums . From and after the Effective Time, First Data will pay all premiums, taxes, assessments or similar charges (retrospectively-rated or otherwise) as required under the terms and conditions of the respective Shared Policies in respect of periods of coverage prior to the Effective Time, whereupon Western Union will upon the request of First Data promptly reimburse First Data for that portion of such additional premiums and other payments paid by First Data as are reasonably determined by First Data to be attributable to the Western Union Business. Notwithstanding the foregoing, to the extent that Western Union has previously paid a premium (or has been allocated a portion of a premium by First Data) or satisfied a deductible amount under a Shared Policy, Western Union shall not be required to pay such premium pursuant to the foregoing sentence or satisfy such deductible again if Western Union makes a claim under such Shared Policy in accordance with this Article X .
SECTION 10.8 Agreement for Waiver of Conflict and Shared Defense . In the event that a Shared Policy provides coverage for both a First Data Party, on the one hand, and a Western Union Party, on the other hand, relating to the same occurrence, First Data and Western Union agree to defend jointly, provided that in the event there is a conflict of interest which in the reasonable opinion of either Party would otherwise prevent the conduct of that joint defense, the Parties shall cooperate to pursue coverage under such Shared Policy pursuant to appropriate arrangements (which may require separate counsel) as permitted by such Shared Policy. Nothing in this Section 10.8 will be construed to limit or otherwise alter in any way the indemnity obligations of the Parties, including those created by this Agreement, by operation of law or otherwise.
SECTION 10.9 Duty to Mitigate Settlements . To the extent that any Party is responsible for the Claims Administration for any claims under any Shared Policies after the Effective Time, such Party shall use its commercially reasonable efforts to mitigate the amount of any settlements of such claims.
SECTION 10.10 Non-Waiver of Rights to Coverage . An insurance carrier that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Article X , have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurance carrier or any third Party shall be entitled to a benefit (i.e., a benefit such Person would not be entitled to receive had the Distribution not occurred or in the absence of the provisions of this Article X ) by virtue of the provisions hereof.
ARTICLE XI
EXPENSES
SECTION 11.1 Expenses Incurred On or Prior To the Distribution Date . Except as otherwise provided in this Agreement, any Operating Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties hereto, each of First Data and Western Union shall pay all Third Party fees, costs and expenses paid or incurred by it (including those fees, costs and expenses identified on Schedule 11.1(A) ) in connection with the preparation, execution, delivery and implementation of this Agreement, any Operating Agreement, any other agreement contemplated hereby, the Form 10 Registration Statement, the Stock Options Registration Statement and the Distribution and the consummation of the
 
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transactions contemplated hereby and thereby (“ Separation Costs ”); provided , however , that First Data will pay all non-recurring Third Party fees, costs and expenses in connection with the foregoing incurred on or prior to the Distribution Date that First Data deems necessary to effect the Distribution (including those Separation Costs identified on Schedule 11.1(B) ) and Western Union will pay all non-recurring Third Party fees, costs and expenses in connection with the foregoing incurred prior to the Distribution that are expected to benefit Western Union following the Distribution in the ordinary course of business (including those Separation Costs identified on Schedule 11.1(C) ).
SECTION 11.2 Expenses Incurred or Accrued After the Distribution Date . Except as otherwise provided in this Agreement, any Operating Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties hereto, First Data and Western Union shall each bear its own costs and expenses incurred after the Distribution Date.
ARTICLE XII
INDEMNIFICATION
SECTION 12.1 Release of Pre-Distribution Claims .
(a) Except as provided in Section 12.1(b) or on Schedule 12.1(A) , effective as of the Distribution Date, each Party hereto does hereby, on behalf of itself and its successors and assigns, release and forever discharge the other Party and such other Party’s respective successors and assigns and all Persons who at any time prior to the Distribution Date have been directors, officers or employees of such other Party (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all demands, Actions and Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any Contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Distribution.
(b) Nothing contained in Section 12.1(a) shall impair any right of any Person identified in Section 12.1(a) to enforce this Agreement, any Transaction Agreement or any Employee Contract. Nothing contained in Section 12.1(a) shall release or discharge any Person from:
(i) any Liability or obligation provided in or resulting from any Merchant Alliance Agreement or any agreement of the First Data Parties and Western Union Parties that is specified in Schedule 12.1(B) , to the extent set forth therein;
(ii) any Liability, contingent or otherwise, assumed, transferred, assigned, retained or allocated to that Person in accordance with, or any other Liability of that Person under, this Agreement or any of the Transaction Agreements;
(iii) any Liability that any Party may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties or their respective Subsidiaries or Affiliates by Third Parties, which Liability shall be governed by the provisions of this Article XII ;
 
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(iv) any Liability that any Party may have with respect to indemnification or contribution pursuant to any of the Operating Agreements for claims brought against the Parties or their respective Subsidiaries or Affiliates by Third Parties, which Liability shall be governed by the provisions of the appropriate provisions of the Operating Agreements;
(v) any unpaid accounts payable or receivable arising from or relating to the sale, provision, or receipt of goods, payment for goods, property or services purchased, obtained or used in the ordinary course of business by a Western Union Party from a First Data Party, or by a First Data Party from a Western Union Party, pursuant to a Commercial Agreement prior to the Distribution Date or any related refund claims;
(vi) any Liability the release of which would result in the release of any Person other than a First Data Party or a Western Union Party or their respective directors, officers and employees; provided , however , that the Parties hereto agree not to bring suit against the other Party or any of their respective directors, officers and employees with respect to any such Liability;
(vii) any Liability or obligation provided in or resulting from any Employee Contract; or
(viii) any Liability or obligation between a Western Union Party and a Merchant Alliance.
In addition, nothing contained in Section 12.2(a) shall release any Party from honoring its existing obligations to indemnify any Person who was a director, officer or employee of such Party, at or prior to the Effective Time, to the extent such Person becomes a named defendant in any Action involving such Party, and was entitled to such indemnification pursuant to then existing obligations; provided , however , that to the extent applicable, Sections 12.2 and 12.3 hereof shall determine whether any Party shall be required to indemnify the other in respect of such Liability.
(c) No Party hereto shall make, nor permit any Affiliates to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other Party, or any other Person released pursuant to Section 12.1(a) , with respect to any Liability released pursuant to Section 12.1(a) .
(d) It is the intent of each of the Parties hereto by virtue of the provisions of this Section 12.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date between the First Data Parties and the Western Union Parties (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the Distribution Date), except as expressly set forth in Section 12.1(b) . At any time, at the reasonable request of either Party, the other Party hereto shall execute and deliver releases reflecting the provisions hereof.
 
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SECTION 12.2 Indemnification by Western Union . Except as provided in Section 12.5 , as expressly provided in the Operating Agreements or as provided in Schedule 12.2 , Western Union shall indemnify, defend and hold harmless the First Data Parties (for so long as such Person is a First Data Party) and each of their Affiliates (for so long as such Person is an Affiliate of a First Data Party), directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ First Data Indemnified Parties ”), from and against any and all Expenses or Losses incurred or suffered by one or more of the First Data Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:
(a) the failure by any Western Union Party or any other Person to pay, perform or otherwise promptly discharge any Western Union Liability;
(b) any Western Union Liability;
(c) the Western Union Business as conducted (regardless of whether by First Data and its Subsidiaries, including the Western Union Parties, or another Person) on, at any time prior to or at any time after the Distribution Date;
(d) except to the extent provided in Section 12.3(d) , any claim that the information included in the Form 10 Registration Statement or the Information Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(e) except to the extent provided in Section 12.3(e) , any claim that the information included in the Note Offering Registration Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(f) except to the extent provided in Section 12.3(f) , any claim that the information included in the Stock Options Registration Statement or the prospectus forming a part thereof is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(g) the use by any Western Union Party after the Effective Time of the name First Data or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any First Data Party;
(h) the breach by any Western Union Party of any covenant or agreement set forth in this Agreement or any Conveyancing Instrument;
(i) any item or matter for which reimbursement or indemnification is to be provided by Western Union in accordance with Section 7.04 of the Employee Matters Agreement; and
(j) any Western Union Financial Instrument,
 
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in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date.
SECTION 12.3 Indemnification by First Data . Except as provided in Section 12.5 and except as expressly provided in the Operating Agreements or as provided in Schedule 12.3 , First Data shall indemnify, defend and hold harmless the Western Union Parties (for so long as such Person is a Western Union Party) and each of their Affiliates (for so long as such Person is an Affiliate of a Western Union Party), directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Western Union Indemnified Parties ”), from and against any and all Expenses or Losses incurred or suffered by one or more of the Western Union Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:
(a) the failure by any First Data Party or any other Person to pay, perform or otherwise promptly discharge any First Data Liability;
(b) any First Data Liability;
(c) the First Data Business as conducted (regardless of whether by First Data and its Subsidiaries, including the Western Union Parties, or another Person) on, at any time prior to or at any time after the Distribution Date;
(d) solely with respect to the information contained in the Form 10 Registration Statement or the Information Statement that is set forth on Schedule 12.3(D) , any claim that the information included in the Form 10 Registration Statement or the Information Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(e) solely with respect to the information contained in the Note Offering Registration Statement or the Information Statement that is set forth on Schedule 12.3(E) , any claim that the information included in the Note Offering Registration Statement is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(f) solely respect to the information contained in the Stock Options Registration Statement or the prospectus forming a part thereof that is set forth on Schedule 12.3(F) , any claim that the information included in the Stock Options Registration Statement or the prospectus forming a part thereof is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
 
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(g) the use by any First Data Party after the Effective Time of the name Western Union or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to any Western Union Party;
(h) the breach by any First Data Party of any covenant or agreement set forth in this Agreement or any Conveyancing Instrument;
(i) any item or matter for which reimbursement or indemnification is to be provided by First Data in accordance with Section 7.04 of the Employee Matters Agreement; and
(j) any First Data Financial Instrument,
in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date.
SECTION 12.4 Applicability of and Limitation on Indemnification . Except as expressly provided herein, the indemnity obligation under this Article XII shall apply notwithstanding any investigation made by or on behalf of any Indemnified Party and shall apply without regard to whether the Loss or Expense for which indemnity is claimed hereunder is based on strict liability, absolute liability or any other theory of liability or arises as an obligation for contribution.
SECTION 12.5 Adjustment of Indemnifiable Losses .
(a) The amount that either Party (an “ Indemnifying Party ”) is required to pay to any Person entitled to indemnification hereunder (an “ Indemnified Party ”) shall be reduced by any insurance proceeds and other amounts actually recovered by or on behalf of such Indemnified Party in reduction of the related Expense or Loss. Each of First Data and Western Union shall use its respective reasonable best efforts to collect any proceeds under its respective available and applicable Third Party insurance policies to which it or any of its Subsidiaries is entitled prior to seeking indemnification or contribution under this Agreement, where allowed; provided , however , that any such actions by an Indemnified Party will not relieve the Indemnifying Party of any of its obligations under this Agreement, including the Indemnifying Party’s obligation to pay directly or reimburse the Indemnified Party for costs and expenses actually incurred by the Indemnified Party. If an Indemnified Party receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Expense or Loss and subsequently actually receives insurance proceeds or other amounts in respect of such Expense or Loss, then such Indemnified Party shall refund to the Indemnifying Party a sum equal to the lesser of (i) the after-tax amount of such insurance proceeds or other amounts actually received and (ii) the net amount of Indemnity Payments actually received previously. The Indemnified Party agrees that the Indemnifying Party shall be subrogated to such Indemnified Party under any insurance policy.
 
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(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a “windfall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.
(c) Indemnity Payments (i) shall not be increased to take into account any tax costs incurred by the Indemnified Party arising from any Indemnity Payments from the Indemnifying Party and (ii) shall not be reduced to take into account any tax benefit received by the Indemnified Party arising from the incurrence or payment of any Indemnity Payment.
(d) Amounts paid by First Data to or for the benefit of Western Union or by Western Union to or for the benefit of First Data under this Article XII (and under other specified provisions of this Agreement) shall be treated by the Parties, for all applicable tax purposes, as adjustments to the amount of the value of the Western Union Subsidiaries and Transferred Business Assets.
(e) In the event that an Indemnity Payment shall be denominated in a currency other than United States dollars, the amount of such payment shall be translated into United States dollars using the Foreign Exchange Rate for such currency determined in accordance with the following rules:
(i) with respect to an Expense or a Loss arising from payment by a financial institution under a guarantee, comfort letter, letter of credit, foreign exchange contract or similar instrument, the Foreign Exchange Rate for such currency shall be determined as of the date on which such financial institution shall have been reimbursed;
(ii) with respect to an Expense or a Loss covered by insurance, the Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate employed by the insurance company providing such insurance in settling such Expense or Loss with the Indemnifying Party; and
(iii) with respect to an Expense or a Loss not covered by clause (i)  or (ii)  above, the Foreign Exchange Rate for such currency shall be determined as of the date that notice of the claim with respect to such Expense or Loss shall be given to the Indemnified Party.
SECTION 12.6 Procedures for Indemnification of Third Party Claims .
(a) If any Third Party shall make any claim or commence any arbitration proceeding or suit (each such claim, proceeding or suit being a “ Third Party Claim ”) against any one or more of the Indemnified Parties with respect to which an Indemnified Party intends to make any claim for indemnification against Western Union under Section 12.2 or against First Data under Section 12.3 , such Indemnified Party shall promptly, but in no event later than 10 days after receipt by the Indemnified Party of written notice of the Third Party Claim, give written notice to
 
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the Indemnifying Party describing such Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified Party to provide notice in accordance with this Section 12.6(a) shall not relieve the related Indemnifying Party of its obligations under this Article XII , except to the extent that such Indemnifying Party is actually prejudiced by such failure to provide notice.
(b) The Indemnifying Party shall have 30 days after receipt of the notice referred to in Section 12.6(a) to notify the Indemnified Party that it elects to conduct and control the defense of such Third Party Claim. If the Indemnifying Party does not give the foregoing notice, the Indemnified Party shall have the right to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion subject to the provisions of Section 12.6(c) , and the Indemnifying Party shall, upon request from any of the Indemnified Parties, promptly pay to such Indemnified Parties in accordance with the other terms of this Section 12.6(b) the amount of any Expense or Loss subject to indemnification hereunder resulting from the Third Party Claim. If the Indemnifying Party gives the foregoing notice, the Indemnifying Party shall have the right to undertake, conduct and control, through counsel reasonably acceptable to the Indemnified Party, and at its sole expense, the conduct and settlement of such Third Party Claim, and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith, provided that: (i) the Indemnifying Party shall use its reasonable best efforts to prevent any lien, encumbrance or other adverse charge to thereafter attach to any asset of any Indemnified Party; (ii) the Indemnifying Party shall use its reasonable best efforts to prevent any injunction against any Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified Party and any counsel chosen by the Indemnified Party and reasonably acceptable to the Indemnifying Party to monitor such conduct or settlement and shall provide the Indemnified Party and any such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but the fees and expenses of such counsel chosen by the Indemnified Party shall be borne by the Indemnified Party unless (A) the Indemnifying Party and the Indemnified Party shall have mutually agreed that the Indemnifying Party should pay for such counsel or (B) the named parties to any such Third Party Claim include the Indemnified Party and the Indemnifying Party and representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and disbursements of counsel for such Indemnified Party shall be paid or reimbursed by the Indemnifying Party; and (iv) the Indemnifying Party shall agree promptly to reimburse to the extent required under this Article XII the Indemnified Party for the full amount of any Expense or Loss resulting from such Third Party Claim. In no event shall the Indemnifying Party, without the prior written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all liability in respect of such claim.
If the Indemnifying Party shall not have undertaken the conduct and control of the defense of any Third Party Claim as provided above, the Indemnifying Party shall nevertheless be entitled through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Party to monitor the conduct or settlement of such claim by the Indemnified Party, and the Indemnified Party shall provide the Indemnifying Party and such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but all costs and expenses incurred in connection with such monitoring shall be borne by the Indemnifying Party.
 
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(c) Subject to Section 12.6(f) , so long as the Indemnifying Party is contesting any such Third Party Claim in its reasonable good faith judgment or is settling such Third Party Claim in accordance with this Section 12.6 , the Indemnified Party shall not pay or settle any such Third Party Claim.
(d) If the Indemnified Party determines in its reasonable good faith judgment that the Indemnifying Party is not contesting such Third Party Claim in good faith or is not settling such Third Party Claim in accordance with this Section 12.6 , the Indemnified Party shall have the right to undertake control of the defense of such Third Party Claim upon five (5) days written notice to the Indemnifying Party and thereafter to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion.
(e) If the Indemnified Party shall have undertaken the conduct and control of the defense of any Third Party Claim as provided in (b) or (d) above, the Indemnified Party, on not less than 30 days prior written notice to the Indemnifying Party, may make settlement (including payment in full) of such Third Party Claim, and such settlement shall be binding upon the Parties for the purposes hereof, unless within said 30-day period the Indemnifying Party shall have requested the Indemnified Party to contest such Third Party Claim at the expense of the Indemnifying Party. In such event, but subject to Section 12.6(f) , the Indemnified Party shall promptly comply with such request and the Indemnifying Party shall have the right to direct the defense of such claim or any litigation based thereon subject to all of the conditions of Section 12.6(b) .
(f) Notwithstanding the limitations on the Indemnified Party’s right to settle a Third Party Claim pursuant to Section 12.6(c) and Section 12.6(e) , the Indemnified Party shall have the right to pay or settle any Third Party Claim, provided that, in such event the Indemnified Party shall waive any right to indemnity therefor by the Indemnifying Party, and no amount in respect thereof shall be claimed as an Expense or a Loss under this Article XII .
(g) To the extent that, with respect to any claim governed by Article V of the Tax Allocation Agreement, there is any inconsistency between the provisions of such Article and of this Section 12.6 , the provisions of Article V of the Tax Allocation Agreement shall control with respect to such claim.
SECTION 12.7 Procedures for Indemnification of Direct Claims . Any claim for indemnification on account of an Expense or a Loss made directly by the Indemnified Party against the Indemnifying Party and that does not result from a Third Party Claim shall be asserted by written notice from the Indemnified Party to the Indemnifying Party specifically claiming indemnification hereunder. Such Indemnifying Party shall have a period of 45 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 45-day period, such Indemnifying Party shall be deemed to have accepted responsibility to make payment and shall have no further right to contest the validity of such claim. If such Indemnifying Party does respond within such 45-day period and rejects such claim in whole or in part, such Indemnified Party shall be free to pursue resolution as provided in Article XIII .
 
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SECTION 12.8 Contribution . If the indemnification provided for in this Article XII is judicially determined to be unavailable (other than in accordance with the terms hereof) to an Indemnified Party in respect of any Losses or Expenses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Expense or Loss in such proportion as is appropriate to reflect the relative fault of the Western Union Indemnified Parties, on the one hand, and the First Data Indemnified Parties, on the other hand, in connection with the conduct, statements or omissions that resulted in such Expense or Loss. The relative fault of any Western Union Indemnified Party, on the one hand, and of any First Data Indemnified Party, on the other hand, in the case of any Expense or Loss arising out of or related to information contained in the Form 10 Registration Statement, the Information Statement or other securities law filing shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by the Western Union Business or a Western Union Indemnified Party, on the one hand, or by the First Data Business or a First Data Indemnified Party, on the other hand. The information on Schedules 12.3(D) , 12.3(E) and 12.3(F) shall deemed supplied by the First Data Business or the First Data Indemnified Parties. All other information in the Form 10 Registration Statement, the Information Statement and the Stock Options Registration Statement (including the related prospectus) shall be deemed supplied by the Western Union Business or the Western Union Indemnified Parties.
SECTION 12.9 Remedies Cumulative . The remedies provided in this Article XII shall be cumulative and, subject to the provisions of Article XII , shall not preclude assertion by an Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party.
SECTION 12.10 Survival . All covenants and agreements of the Parties contained in this Agreement relating to indemnification shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein.
ARTICLE XIII
DISPUTE RESOLUTION
SECTION 13.1 Agreement to Arbitrate . Except as otherwise specifically provided herein or in any Transaction Agreement, the procedures for discussion, negotiation and arbitration set forth in this Article XIII shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement or any Transaction Agreement. Each Party hereto agrees on behalf of itself and its respective Affiliates that the procedures set forth in this Article XIII shall be the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any Action in or before any Governmental Authority, except as expressly provided in Section 13.7(b) and except to the extent provided under the Arbitration Act in the case of judicial review of arbitration results or awards. EACH PARTY ON BEHALF OF ITSELF AND ITS
 
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RESPECTIVE AFFILIATES IRREVOCABLY WAIVES ANY RIGHT TO ANY TRIAL IN A COURT THAT WOULD OTHERWISE HAVE JURISDICTION OVER ANY CLAIM, CONTROVERSY OR DISPUTE SET FORTH IN THE FIRST SENTENCE OF THIS SECTION 13.1 .
SECTION 13.2 Escalation and Mediation . (a) The Parties hereto agree to use commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, either Party involved in a dispute, controversy or claim may deliver a notice (an “ Escalation Notice ” ) demanding an in-person meeting involving representatives of the Parties hereto at a senior level of management of the Parties hereto (or if the Parties hereto agree, of the appropriate strategic business unit or division within each Party). A copy of any such Escalation Notice shall be given to the General Counsel, or like officer, of each Party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided , however , that the Parties shall use commercially reasonable efforts to meet within 30 days of the Escalation Notice.
(b) The Parties may retain a mediator to aid the Parties in their discussions and negotiations by informally providing advice to the Parties. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the Parties, nor shall any opinion expressed by the mediator be admissible in any arbitration proceeding. The mediator shall be selected by the Party that did not deliver the applicable Escalation Notice from a list of individuals to be supplied to the Parties by JAMS/Endispute. Costs of the mediation shall be borne equally by the Parties involved in the matter, except that each Party shall be responsible for its own expenses. Mediation is a prerequisite to a demand for arbitration under Section 13.3 .
SECTION 13.3 Procedures for Arbitration . (a) At any time after the completion of the mediation required by Section 13.2(b) (the “ Arbitration Demand Date ”), either Party involved in the dispute, controversy or claim (regardless of whether such Party delivered the Escalation Notice) may, unless the Applicable Deadline (as hereinafter defined) has occurred, make a written demand (the “ Arbitration Demand Notice ”) that the dispute be resolved by binding arbitration, which Arbitration Demand Notice shall be given to the Parties to the dispute, controversy or claim in the manner set forth in Section 15.9 . If either Party shall deliver an Arbitration Demand Notice to another Party, such other Party may itself deliver an Arbitration Demand Notice to such first Party with respect to any related dispute, controversy or claim with respect to which the Applicable Deadline has not passed without the requirement of delivering an Escalation Notice. No Party may assert that the failure to resolve any matter during any discussions or negotiations, the course of conduct during the discussions or negotiations or the failure to agree on a mutually acceptable time, agenda, location or procedures for the meeting, in each case, as contemplated by Section 13.2 , is a prerequisite to a demand for arbitration under this Section 13.3 . If either Party delivers an Arbitration Demand Notice with respect to any dispute, controversy or claim that is the subject of any then pending arbitration proceeding or of a previously delivered Arbitration Demand Notice, all such disputes, controversies and claims shall be resolved in the arbitration proceeding for which an Arbitration Demand Notice was first delivered unless the arbitrator(s) in his, her or their sole discretion determine(s) that it is impracticable or otherwise inadvisable to do so.
 
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(b) Except as may be expressly provided in any Operating Agreement, any Arbitration Demand Notice may be given until two years after the later of (i) the occurrence of the act or event giving rise to the underlying claim (it being understood that in the case of a Third Party Claim, such date shall be the date of assertion of the Third Party Claim rather than the act or event underlying the Third Party Claim) and (ii) the date on which such act or event was, or should have been, in the exercise of reasonable due diligence, discovered by the Party asserting the claim (as applicable and as it may in a particular case be specifically extended by the Parties in writing, the “ Applicable Deadline ”). Any discussions, negotiations or mediations between the Parties pursuant to this Agreement or otherwise will not toll the Applicable Deadline unless expressly agreed in writing by the Parties. Each Party agrees on behalf of itself and its respective Subsidiaries and Affiliates that if an Arbitration Demand Notice with respect to a dispute, controversy or claim is not given prior to the expiration of the Applicable Deadline, such dispute, controversy or claim will be barred. Subject to Section 13.7(d) , upon delivery of an Arbitration Demand Notice pursuant to Section 13.3(a) prior to the Applicable Deadline, the dispute, controversy or claim shall be decided by one or more arbitrators in accordance with the rules set forth in this Article XIII .
SECTION 13.4 Selection of Arbitrator(s) . (a) If the amount in dispute is less than $2,000,000, the mediator selected by the provisions set forth in Section 13.2(b) above shall also serve as the sole arbitrator. If the amount in dispute equals or exceeds $2,000,000, the mediator selected by the provisions set forth in Section 13.2(b) shall select a panel of three arbitrators from a list provided by JAMS/Endispute. After selection of such panel of arbitrators, the mediator shall have no further role with respect to the dispute. Any arbitrator selected pursuant to this Section 13.4(a) shall be disinterested with respect to each of the Parties and the matter and shall be reasonably competent in the applicable subject matter.
(b) The arbitrator(s) selected pursuant to Section 13.4(a) will set a time for the hearing of the matter which will commence no later than 90 days after the date of appointment theref pursuant to Section 13.4(a) , and such hearing will be no longer than 30 days (unless in the judgment of the arbitrator(s), the matter is unusually complex and thereby requires a longer time, in which event such hearing shall be no longer than 90 days). The final decision of such arbitrator(s) will be rendered in writing to the Parties not later than 60 days after the last hearing date, unless otherwise agreed by the Parties in writing. Any judgment or decision of a panel of arbitrators pursuant to this Agreement shall be determined by concurrence of at least two of the three members of the panel of arbitrators appointed hereunder with respect to the applicable dispute.
SECTION 13.5 Hearings . Within the time period specified in Section 13.4(b) , the matter shall be presented to the arbitrator(s) at a hearing by means of written submissions of memoranda and verified witness statements, filed simultaneously, and responses, if necessary in the judgment of the arbitrator(s) or both of the Parties. If the arbitrator(s) deem(s) it to be essential to a fair resolution of the dispute, live cross-examination or direct examination may be permitted, but is not generally contemplated to be necessary. The arbitrator(s) shall actively manage the arbitration with a view to achieving a just, speedy and cost-effective resolution of the
 
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dispute, claim or controversy. The arbitrator(s) may, in his, her or their sole discretion, set time and other limits on the presentation of each Party’s case, its memoranda or other submissions, and refuse to receive any proffered evidence that the arbitrator(s), in his, her or their sole discretion, find(s) to be cumulative, unnecessary, irrelevant or of low probative nature. Except as otherwise set forth herein, any arbitration hereunder will be conducted in accordance with the JAMS/Endispute Streamlined Rules for Commercial, Real Estate and Construction Cases then prevailing. The decision of the arbitrator(s) will be final and binding on the Parties, and judgment thereon may be had and will be enforceable in any court having jurisdiction over the Parties. Arbitration awards will bear interest from the date of the award at an annual rate of the Prime Rate plus 2%. To the extent that the provisions of this Agreement and the prevailing rules of JAMS/Endispute conflict, the provisions of this Agreement shall govern.
SECTION 13.6 Discovery and Certain Other Matters . (a) Either Party involved in the applicable dispute, controversy or claim may request limited document production from the other Party of specific and expressly relevant documents, with the reasonable expenses of the producing Party incurred in such production paid by the requesting Party. Any such discovery (which rights to documents shall be substantially less than document discovery rights prevailing under the Federal Rules of Civil Procedure) shall be conducted expeditiously and shall not cause the hearing provided for in Section 13.5 to be adjourned except upon consent of both Parties or upon a showing of cause demonstrating that such adjournment is necessary to permit discovery essential to a Party to the proceeding. Depositions, interrogatories or other forms of discovery (other than the document production set forth above) shall not occur except by consent of both Parties. Disputes concerning the scope of document production and enforcement of the document production requests will be determined by written agreement of the Parties or, failing such agreement, will be referred to the arbitrator(s) for resolution. All discovery requests will be subject to the Parties’ rights to claim any applicable privilege. The arbitrator(s) will adopt procedures to protect the proprietary rights of the Parties and to maintain the confidential treatment of the arbitration proceedings (except as may be required by law). Subject to the foregoing, the arbitrator(s) shall have the power to issue subpoenas to compel the production of documents relevant to the dispute, controversy or claim.
(b) The arbitrator(s) shall have full power and authority to determine issues of arbitrability but shall otherwise be limited to interpreting or construing the applicable provisions of this Agreement or any Operating Agreement, and will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement or any Operating Agreement; it being understood, however, that the arbitrator(s) will have full authority to implement the provisions of this Agreement or any Operating Agreement and to fashion appropriate remedies for breaches of this Agreement (including interim or permanent injunctive relief); provided , however , that the arbitrator(s) shall not have any authority in excess of the authority a court having jurisdiction over the Parties and the controversy or dispute would have absent these arbitration provisions. It is the intention of the Parties that in rendering a decision the arbitrator(s) give effect to the applicable provisions of this Agreement and the Operating Agreements and follow applicable law (it being understood and agreed that this sentence shall not give rise to a right of judicial review of the arbitrator(s)’s award).
 
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(c) If a Party fails or refuses to appear at and participate in an arbitration hearing after due notice, the arbitrator(s) may hear and determine the controversy upon evidence produced by the appearing Party.
(d) Arbitration costs shall be borne equally by each Party involved in the matter, except that each Party shall be responsible for its own attorney’s fees and other costs and expenses, including the costs of witnesses selected by such Party.
SECTION 13.7 Certain Additional Matters . (a) Any arbitration award shall be a bare award limited to a holding for or against a Party and shall be without findings as to facts, issues or conclusions of law (including with respect to any matters relating to the validity or infringement of patents or patent applications) and shall be without a statement of the reasoning on which the award rests, but must be in adequate form so that a judgment of a court may be entered thereupon. Judgment upon any arbitration award hereunder may be entered in any court having jurisdiction thereof.
(b) Prior to the time at which one or more arbitrator(s) is appointed pursuant to Section 13.4 , either Party may seek one or more temporary restraining orders in a court of competent jurisdiction if necessary in order to preserve and protect the status quo. Neither the request for, nor the grant or denial of, any such temporary restraining order shall be deemed a waiver of the obligation to arbitrate as set forth herein, and the arbitrator(s) may dissolve, continue or modify any such order. Any such temporary restraining order shall remain in effect until the first to occur of the expiration of the order in accordance with its terms or the dissolution thereof by the arbitrator(s).
(c) Except as required by law, the Parties shall hold, and shall cause their respective officers, directors, employees, agents and other representatives to hold, the existence, content and result of mediation or arbitration in confidence in accordance with the provisions of Article XIV and except as may be required in order to enforce any award. Each of the Parties shall request that any mediator or arbitrator(s) comply with such confidentiality requirement.
(d) If at any time any arbitrator shall fail to serve as an arbitrator for any reason, the Parties shall select a new arbitrator who shall be disinterested as to the Parties and the matter in accordance with the procedure set forth herein for the selection of the initial arbitrator. The extent, if any, to which testimony previously given shall be repeated or as to which the replacement arbitrator elects to rely on the stenographic record (if there is one) of such testimony shall be determined by the arbitrator(s).
SECTION 13.8 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Operating Agreement during the course of dispute resolution pursuant to the provisions of this Article XIII with respect to all matters not subject to such dispute, controversy or claim to the extent such Party is obligated to do so pursuant to the underlying agreement.
SECTION 13.9 Law Governing Arbitration Procedures . The interpretation of the provisions of this Article XIII , only insofar as they relate to the agreement to arbitrate and any
 
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procedures pursuant thereto, shall be governed by the Arbitration Act and other applicable federal law. In all other respects, the interpretation of this Agreement shall be governed as set forth in Section 15.2 .
SECTION 13.10 Choice of Forum . Any arbitration hereunder shall take place in Denver, Colorado, unless otherwise agreed in writing by the Parties.
ARTICLE XIV
ACCESS TO INFORMATION AND SERVICES
SECTION 14.1 Agreement for Exchange of Information . (a) At all times from and after the Distribution Date for a period of ten years, as soon as reasonably practicable after written request: (i) First Data shall afford to the Western Union Parties and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at Western Union’s expense, provide copies of, all records, books, contracts, instruments, data, documents and other information (collectively, “ Information ”) in the possession or under the control of First Data immediately following the Distribution Date that relates to Western Union, the Western Union Business or the employees of the Western Union Business; and (ii) Western Union shall afford to the First Data Parties and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at First Data’s expense, provide copies of, all Information in the possession or under the control of Western Union immediately following the Distribution Date that relates to First Data, the First Data Business or the employees of the First Data Business; provided , however , that in the event that either First Data or Western Union determines that any such provision of or access to Information would be commercially detrimental in any material respect, violate any law or agreement or waive any attorney-client privilege, the work product doctrine or other applicable privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.
(b) Either Party hereto may request Information under Section 14.1(a) or Section 14.7 : (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting Party; (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims defense, regulatory filings, litigation, tax or other similar requirements; (iii) for use in compensation, benefit or welfare plan administration or other bona fide business purposes; or (iv) to comply with its obligations under this Agreement or any Operating Agreement.
(c) Without limiting the generality of the foregoing, until the end of the first full Western Union fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each Party shall use its commercially reasonable efforts, to cooperate with the other Party’s Information requests to enable the other Party to meet its timetable for dissemination of its earnings releases, financial statements and enable such other Party’s auditors to timely complete their audit of the annual financial statements and review of the quarterly financial statements.
 
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SECTION 14.2 Ownership of Information . Any Information owned by one Party that is provided to a requesting Party pursuant to Section 14.1 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such Information.
SECTION 14.3 Compensation for Providing Information . The Party requesting Information agrees to reimburse the providing Party for the reasonable costs, if any, of gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party. Except as otherwise specifically provided in this Agreement, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures, if any, and if there is no such standard methodology and procedures, then on a commercially reasonable basis.
SECTION 14.4 Retention of Records . To facilitate the possible exchange of Information pursuant to this Article XIV after the Distribution Date, except as otherwise required or agreed in writing, or as otherwise provided in the Tax Allocation Agreement, the Parties hereto agree to use commercially reasonable efforts to retain all Information in their respective possession or control on the Distribution Date in accordance with the policies and procedures of First Data as in effect on the Distribution Date or such other policies and procedures as may reasonably be adopted by the applicable Party after the Distribution Date as provided herein. For a period of ten years following the Distribution Date, prior to amending in any material respect its policies and/or legal hold procedures with respect to retention of Information held by such Party as of the Effective Time, the Party proposing to amend its policies and/or legal hold procedures shall use its commercially reasonable efforts to provide no less than 30 days’ prior written notice to the other Party, specifying the amendments proposed to be made, and if, prior to the scheduled date for implementation of such amended policies and/or legal hold procedures, the other Party requests in writing that implementation of such amended policies and/or legal hold procedures be delayed, the other Party shall defer implementation for an additional 30 days and shall discuss in good faith during such 30 day period the written concerns and objections of the other Party. Notwithstanding the foregoing, neither Party shall be required to delay implementation of any amendment to Information retention policies and legal hold procedures to the extent such amendments are required by applicable law.
SECTION 14.5 Limitation of Liability . No Party shall have any liability to the other Party (a) if any Information exchanged or provided pursuant to this Agreement that is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate, in the absence of gross negligence or willful misconduct by the Party providing such Information, or (b) if any Information is destroyed despite using commercially reasonable efforts to comply with the provisions of Section 14.4 .
SECTION 14.6 Production of Witnesses . At all times from and after the Distribution Date, each Party shall use commercially reasonable efforts to make available to the other Party (without cost (other than reimbursement of actual Out-of-Pocket Expenses) to, and upon prior written request of, the other Party) its directors, officers, employees and agents as witnesses to the extent that the same may reasonably be required by the other Party (giving consideration to business demands of such directors, officers, employees and agents) in connection with any legal, administrative or other proceeding (except in the case of any proceeding by one Party
 
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against the other Party) in which the requesting Party may from time to time be involved with respect to the Western Union Business, the First Data Business or any transactions contemplated hereby.
SECTION 14.7 Sharing of Knowledge . For a period of two years following the Distribution Date, subject to any limitations set forth in any Operating Agreement, as soon as reasonably practicable after written request: (i) to the extent that information or knowledge with respect to the Western Union Business is available through discussions with employees of the First Data Parties, First Data shall make such employees reasonably available to Western Union to provide such information or knowledge; and (ii) to the extent that information or knowledge relating to the First Data Business is available through discussions with employees of the Western Union Parties, Western Union shall make such employees reasonably available to First Data to provide such information or knowledge; provided , however , that in the event that either First Data or Western Union determines that any such provision of such information or knowledge would be commercially detrimental in any material respect, violate any law or agreement or waive any attorney-client privilege, the work product doctrine or other applicable privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.
SECTION 14.8 Confidentiality . (a) From and after the Distribution Date, each of First Data and Western Union shall hold, and shall cause their respective Subsidiaries and Affiliates and its and their directors, officers, employees, agents, consultants, advisors, and other representatives (collectively, “ Representatives ”) to hold, in strict confidence, with at least the same degree of care that applies to First Data’s confidential and proprietary information pursuant to policies in effect as of the Distribution Date or such other procedures as may reasonably be adopted by the receiving party after the Distribution Date, all Confidential Information of the disclosing party or any of its Subsidiaries or Affiliates obtained by it prior to the Distribution Date, accessed by it pursuant to Section 14.1 or furnished to it by or on behalf of the disclosing party or any of its Subsidiaries or Affiliates pursuant to this Agreement or, to the extent not addressed in an Operating Agreement, any agreement contemplated hereby, shall not use such Confidential Information (except as contemplated by this Agreement, an Operating Agreement or any agreement contemplated hereby) and shall not release or disclose such Confidential Information to any other Person, except its Representatives, who shall be bound by the provisions of this Section 14.8 ; provided , however , that First Data and Western Union and their respective Representatives may disclose or use such information if, and only to the extent that, (i) a disclosure of such information is compelled by judicial or administrative process or, in the opinion of the receiving party’s counsel, by other requirements of law (in which case such party will provide, to the extent practicable under the circumstances, advance written notice to the other party of its intent to make such disclosure), or (ii) receiving party can show that such information (A) has been published or has otherwise become available to the general public as part of the public domain without breach of this Agreement, (B) has been furnished or made known to the receiving party without any obligation to keep it confidential by a Third Party under circumstances which are not known to the receiving party to involve a breach of the Third Party’s obligations to a party hereto or (C) was developed independently of information furnished or made available to the receiving party as contemplated under this Agreement (except, in the case of each of (A), (B), and (C), to the extent that notwithstanding the foregoing, use or disclosure thereof would be prohibited by applicable law). Each of First Data and Western Union, respectively, shall be responsible for any breach of this Section 14.8 by any of its Representatives.
 
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(b) Without limiting the generality of Section 14.8(a) , from and after the Distribution Date, each of First Data and Western Union will implement and maintain security measures with at least the same degree of care that applies to First Data’s confidential and proprietary information pursuant to policies in effect as of the Distribution Date or such other procedures as may reasonably be adopted by the receiving party after the Distribution that are designed to: (i) secure and maintain the confidentiality of Confidential Information of the other party; (ii) protect Confidential Information of the other party against anticipated threats or hazards; (iii) prevent Personal Information Incidents; and (iv) protect against loss or theft or unauthorized access, copying, disclosure, loss, damage, modification or use of Confidential Information of the disclosing party.
(c) From and after the Distribution Date, to the extent required by applicable law and subject to the proviso included in Section 14.8(a) , each of First Data and Western Union shall, and shall cause their respective Subsidiaries and Affiliates and its and their Representatives to only use Confidential Personal Information received from the other party: (i) in connection with the receiving party’s performance of this Agreement and/or as described in an Operating Agreement or any agreement contemplated hereby; and (ii) in compliance with any express written instructions given by the party to which the Confidential Personal Information belongs, as may be modified from time to time. Upon completion of either party’s use of Confidential Personal Information pursuant to this subsection, at the request of the disclosing party, the receiving party will use commercially reasonable efforts to return such information to the disclosing party or destroy such information in accordance with past practice; provided , however , that if such return or destruction is not reasonably practical or imposes an undue administrative burden, the receiving party will maintain the Confidential Personal Information in compliance with the applicable requirements of this Section 14.8 and with its reasonable record retention and destruction policies.
(d) Each of First Data and Western Union agrees on behalf of itself and their respective Subsidiaries and Affiliates that in the performance of its obligations under this Agreement or the Transaction Agreements, it is a “data processor” to the extent it “processes personal data” on behalf of the other party within a European Economic Area country or received from the other party’s operations in such a country. The terms “data processor”, “processes personal data” and “data controller” shall have the meaning given or applicable to them in the European Union’s Directive 95/46/EC regarding the protection of personal data.
(e) Excluding Confidential Personal Information, each recipient of Confidential Information of the other may enhance its knowledge and experience retained in intangible form in the unaided memories of its Representatives as a result of developing, working with, or viewing the other party’s Confidential Information (collectively, “ Unaided Knowledge ” ). So long as the recipient complies with Section 14.8 of this Agreement, the recipient may develop, disclose, market, transfer and/or use Unaided Knowledge that may be generally similar to the other party’s Confidential Information (excluding Confidential Personal Information), and the other party shall not have any rights in the works created using such Unaided Knowledge nor any rights to compensation related to the recipient’s use of such Unaided Knowledge, nor any rights in the recipient’s business endeavors.
(f) Each of First Data and Western Union acknowledges that the disclosing party would not have an adequate remedy at law for the breach by the receiving Party of any one or more of the covenants contained in this Section 14.8 and agrees that, in the event of such breach, the disclosing party may, in addition to the other remedies that may be available to it, apply to a court for an injunction to prevent breaches of this Section 14.8 and to enforce specifically the terms and provisions of this Section 14.8 . Notwithstanding any other Section hereof, the provisions of this Section 14.8 shall survive the Distribution Date indefinitely.
 
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(g)        (i) Each of First Data and Western Union and their respective Subsidiaries and Affiliates will comply with applicable law with respect to the Confidential Personal Information received by it from the disclosing party and shall maintain procedures reasonably designed to detect and respond to Personal Information Incidents, including procedures for corrective action.
(ii) If a receiving party uses agents or subcontractors who will access, use or otherwise have control over Confidential Personal Information of the disclosing party, the receiving party will enter into a written agreement with such agents and subcontractors that will include confidentiality, use, non-disclosure and safeguards obligations that are at least as restrictive as those provisions to which the receiving party is subject hereunder. 
(ii) Notwithstanding any other obligations either First Data or Western Union may have under applicable law, each of First Data and Western Union agrees to promptly notify the other party upon such party’s discovery of a potential or actual Personal Information Incident. Each of First Data and Western Union will also provide feedback as described below to the disclosing party about any impact such potential or actual Personal Information Incident may or will have on the disclosing party, its Subsidiaries, Affiliates and/or affected individuals ( e.g ., consumers, customers or employees). The party discovering the Personal Information Incident will provide the following information during such notification phone call: (A) problem statement; (B) expected resolution time (if known); provided, however, that if the resolution path is unknown at the time of the phone call, such party will advise the disclosing party that the path is unknown; and (C) the name and phone number of the receiving party representative(s) who may be contacted to obtain incident updates.
(iii) Each of First Data and Western Union understands and agrees that the disclosing party or its Affiliates may be required to report Personal Information Incidents to affected individuals and/or any governmental authority or agency having supervisory or oversight authority over the disclosing party and the disclosing party may provide such reports.
(h) In addition to any other obligations a receiving party may have under this Agreement, at the request of the disclosing party, a receiving party shall: (i) assist in the identification of affected persons and relevant jurisdictions; (ii) allocate call center resources and training to manage inquiries; (iii) provide affected persons with such assistance (credit monitoring, etc.) as the disclosing party deems reasonable; (iv) assist with the delivery of electronic, hard copy and/or telephonic notifications to affected individuals, as provided to the receiving party by the disclosing party; and (v) undertake a procedural review/audit to determine any appropriate corrective measures to avoid a similar situation recurring, and report to the disclosing party the corrective measures undertaken. If the Personal Information Incident results from a receiving party’s acts or omissions that are not otherwise excused pursuant to this Agreement or an applicable Operating Agreement, the receiving party will provide the notification assistance described above at no cost to the disclosing party. In all other cases, the disclosing party will be responsible for any costs associated with the receiving party’s provision of the requested notification assistance described above.
 
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(i) This Section 14.8 shall not apply with respect to Confidential Information furnished to the receiving party or accessed by the receiving party pursuant to a Commercial Agreement, except to the extent that such Commercial Agreement incorporates the provisions of this Section 14.8 by reference.
(j) Notwithstanding the limitations set forth in this Section 14.8 , with respect to financial and other information related to the Western Union Parties for the periods during which such Western Union Parties were Subsidiaries of First Data, in addition to fulfilling its periodic reporting obligations with the SEC as required by applicable law, First Data shall be permitted to disclose such information in its earnings releases, investor calls, rating agency presentations and other similar disclosures to the extent such information has customarily been included by First Data in such disclosures.
SECTION 14.9 Privileged Matters . (a) Each of First Data and Western Union agrees to maintain, preserve and assert all privileges, including privileges arising under or relating to the attorney-client relationship (which shall include the attorney-client and work product privileges), not heretofore waived, that relate to the Western Union Business or the First Data Business for any period prior to the Distribution Date (each a “ Privilege ”). Each Party hereto acknowledges and agrees that any costs associated with asserting any Privilege shall be borne by the Party requesting that such Privilege be asserted. Each Party agrees that it shall not waive any Privilege that could be asserted under applicable law without the prior written consent of the other Party. The rights and obligations created by this Section 14.9 shall apply to all information relating to the First Data Business or the Western Union Business as to which, but for the Distribution, either Party would have been entitled to assert or did assert the protection of a Privilege (“ Privileged Information ”), including (i) any and all information generated prior to the Distribution Date but which, after the Distribution, is in the possession of either Party and (ii) all information generated, received or arising after the Distribution Date that refers to or relates to Privileged Information generated, received or arising prior to the Distribution Date.
(b) Upon receipt by either Party of any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information or if either Party obtains knowledge that any current or former employee of First Data or Western Union has received any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information of the other Party, such Party shall notify promptly the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it may have under this Section 14.9 or otherwise to prevent the production or disclosure of Privileged Information. Each Party agrees that it will not produce or disclose any information that may be covered by a Privilege of the Party under this Section 14.9 unless (i) the other Party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has entered a final, nonappealable order finding that the information is not entitled to protection under any applicable Privilege.
(c) First Data’s transfer of books and records and other information to Western Union, and First Data’s agreement to permit Western Union to possess Privileged Information existing or generated prior to the Distribution Date, are made in reliance on Western Union’s agreement, as set forth in Sections 14.8 and 14.9 , to maintain the confidentiality of Privileged
 
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Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 14.1 , the agreement to provide witnesses and individuals pursuant to Section 14.6 and the transfer of Privileged Information to Western Union pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 14.9 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to First Data in, or the obligations imposed upon Western Union by, this Section 14.9 . Western Union’s transfer of books and records and other information to First Data, and Western Union’s agreement to permit First Data to possess Privileged Information existing or generated prior to the Distribution Date, are made in reliance on First Data’s agreement, as set forth in Sections 14.8 and 14.9 , to maintain the confidentiality of Privileged Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 14.1 , the agreement to provide witnesses and individuals pursuant to Section 14.6 and the transfer of Privileged Information to First Data pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 14.9 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to Western Union in, or the obligations imposed upon First Data by, this Section 14.9 .
SECTION 14.10 Attorney Representation . First Data, on behalf of itself and the other First Data Parties, hereby waives any conflict of interest with respect to any attorney who is or becomes an employee of Western Union resulting from such person being an employee of First Data or any of its Subsidiaries (including the Western Union Parties) at any time prior to the Distribution and agrees to allow such attorney to represent the Western Union Parties in any transaction or dispute with respect to this Agreement, the Operating Agreements, the transactions contemplated hereby and thereby and transactions between the Parties which commence following the Distribution Date. Western Union, on behalf of itself and the other Western Union Parties, hereby waives any conflict of interest with respect to any attorney who is or becomes an employee of First Data resulting from such person being an employee of Western Union or any of its Subsidiaries (including the First Data Parties) at any time prior to the Distribution and agrees to allow such attorney to represent the First Data Parties in any transaction or dispute with respect to this Agreement, the Operating Agreements and the transactions contemplated hereby and thereby and transactions between the Parties which commence following the Distribution Date. In furtherance of the foregoing, each First Data Party and each Western Union Party will, upon request, execute and deliver a specific waiver as may be required in connection with a particular transaction or dispute under the applicable rules of professional conduct in order to effectuate the general waiver set forth above.
SECTION 14.11 Financial Information Certifications . (a) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of First Data to make the certifications required of them under the Sarbanes-Oxley Act of 2002, §302, within 30 days following the end of any fiscal quarter during which Western Union is a Subsidiary of First Data, Western Union shall provide a certification statement with respect to such quarter or portion thereof to those certifying officers and employees of First Data, which certification shall be in substantially the same form as had been provided by officers or employees of Western Union in certifications delivered prior to the Distribution Date (provided that such certification shall be made by Western Union rather than individual officers or employees), or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.
(b) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of Western Union to make the certifications required of them under the Sarbanes-Oxley Act of 2002, §302, within 30 days following the end of any fiscal quarter during which Western Union is a Subsidiary of First Data, First Data shall provide a certification statement with respect to testing of internal controls for corporate and shared services processes for such quarter or portion thereof to those certifying officers and employees of Western Union, which certification shall be in substantially the same form as had been provided by officers or employees of First Data in certifications delivered to its principal executive officer, principal financial officer and controller prior to the Distribution Date (provided that such certification shall be made by First Data rather than individual officers or employees), or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.
 
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Entire Agreement . This Agreement and the Operating Agreements, including the Schedules and Exhibits referred to herein and therein and the documents delivered pursuant hereto and thereto, constitute the entire agreement between the Parties hereto with respect to the subject matter contained herein or therein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.
SECTION 15.2 Choice of Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Delaware.
SECTION 15.3 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.
SECTION 15.4 Waiver . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to either Party, it is in writing signed by an authorized representative of such Party. The failure of either Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of either Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
SECTION 15.5 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
SECTION 15.6 Execution in Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original instrument, but both of which shall be considered one and the same agreement, and shall become binding when the counterparts have been signed by and delivered to each of the Parties hereto.
SECTION 15.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement shall not be
 
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assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
SECTION 15.8 Third Party Beneficiaries . Except to the extent otherwise provided in Article X (solely with respect to the directors and officers insurance policy), Article XII and Section 14.10 , the provisions of this Agreement are solely for the benefit of the Parties and their respective Subsidiaries, Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement or any Operating Agreement.
SECTION 15.9 Notices . All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after mailing or (iv) if sent by private courier when received; and shall be addressed as follows:
If to First Data, to:
First Data Corporation
6855 Pacific Street, AK-31
Omaha, Nebraska 68106
Attention: General Counsel
Facsimile: (402) 222-5256
If to Western Union, to:
The Western Union Company
100 Summit Avenue
Montvale, New Jersey 07645
Attention: General Counsel
Facsimile: (201) 263-6384
or to such other address as such Party may indicate by a notice delivered to the other Party.
SECTION 15.10 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
SECTION 15.11 Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, including acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.
 
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SECTION 15.12 No Public Announcement . Neither First Data nor Western Union shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use their respective commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange.
SECTION 15.13 Termination . Notwithstanding any provisions hereof, this Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution by and in the sole discretion of the Board of Directors of First Data without the prior the approval of any Person. In the event of such termination, this Agreement shall forthwith become void and no Party shall have any liability to any Person by reason of this Agreement.
SECTION 15.14 Limited Liability . Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of such Party under this Agreement or any Operating Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of Western Union and First Data, for itself and its stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law.
SECTION 15.15 Mutual Drafting . This Agreement and the Operating Agreements shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.
 
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IN WITNESS WHEREOF , the Parties hereto have caused this Agreement to be executed by their authorized representatives as of the date first above written.

FIRST DATA CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
	
THE WESTERN UNION COMPANY	
		
By:	 	 	
Name:	 		
Title:	 		
Signature Page to Separation and Distribution Agreement

[Schedules intentionally omitted]
 
Exhibit 3.1
 
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE WESTERN UNION COMPANY
 
The Western Union Company, a Delaware corporation, the original Certificate of Incorporation of which was filed with the Secretary of State of the State of Delaware on _________, 2006, HEREBY CERTIFIES that this Amended and Restated Certificate of Incorporation restating, integrating and amending its Certificate of Incorporation was duly proposed by its Board of Directors and adopted by its stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “GCL”).
 
FIRST : The name of the Corporation is: The Western Union Company (the “Corporation”).
 
SECOND : The registered office of the Corporation is located at Corporation Service Company, 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, in the State of Delaware. The name of its registered agent at such address is Corporation Service Company.
 
THIRD : The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware (“GCL”) as set forth in Title 8 thereof.
 
FOURTH : The total number of shares of stock which the Corporation shall have authority to issue is 2,010,000,000, consisting of 2,000,000,000 shares of Common Stock, each having a par value of $.01, and 10,000,000 shares of Preferred Stock, each having a par value of $1.00 per share.
 
The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the GCL, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock, at such price

or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
 
FIFTH : A. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than one nor more than fifteen directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Class I directors shall be elected initially for a one-year term, Class II directors initially for a two-year term and Class III directors initially for a three-year term. At each succeeding annual meeting of stockholders beginning in 2007, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any vacancy on the Board of Directors, including due to newly created directorships resulting from any increase in the authorized number of directors, may be filled only by a majority of the directors then in office, even if less than a quorum, or a sole remaining director.
 
Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.
 
B. A director may be removed only by the holders of a majority of shares then entitled to vote at an election of directors and only for cause.
 
SIXTH : A. A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by Delaware Law.
 
B. (i) Each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director of the Corporation shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware Law. The right to indemnification conferred in this Article SIXTH shall also include the
 
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right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Delaware Law. The right to indemnification conferred in this Article SIXTH shall be a contract right.
 
(ii) The Corporation may, by action of its Board of Directors, provide indemnification to such of the officers, employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Delaware Law.
 
C. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under Delaware Law.
 
D. The rights and authority conferred in this Article SIXTH shall not be exclusive of any other right which any person may otherwise have or hereafter acquire.
 
E. Neither the amendment nor repeal of this Article SIXTH, nor the adoption of any provision of this Certificate of Incorporation or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall eliminate or reduce the effect of this Article SIXTH in respect of any acts or omissions occurring prior to such amendment, repeal, adoption or modification.
 
SEVENTH : A. Any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of such holders and may not be effected by a consent in writing by such holders in lieu of such a meeting.
 
B. Unless otherwise prescribed by law or by this Certificate of Incorporation (including any Certificates of Designation with respect to any Preferred Stock, the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may only be called by the officers and directors as provided in the Bylaws of the Corporation.
 
C. Notwithstanding anything in this Certificate of Incorporation to the contrary and in addition to any vote of the Board of Directors required by this Certificate of Incorporation, the affirmative vote of the holders of a majority of the outstanding capital stock entitled to vote thereon shall be required to alter, amend or repeal, or adopt any provision inconsistent with, any provision of this Article SEVENTH.
 
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EIGHTH : The By-Laws of the Corporation may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors, provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the affirmative vote of the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the Board of Directors then in office.
 
IN WITNESS WHEREOF , The Western Union Company has caused this Certificate to be signed on this _______ day of ________ 2006 in its name and attested by duly authorized officers.
 
___________________________
 
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Exhibit 3.2
 
BY-LAWS
OF
THE WESTERN UNION COMPANY
(hereinafter called the “Corporation”)
 
ARTICLE I
 
OFFICES
 
Section 1 . Registered Office . The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.
 
Section 2 . Other Offices . The Corporation also may have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine.
 
ARTICLE II
 
MEETINGS OF STOCKHOLDERS
 
Section 1 . Place of Meetings . Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting.
 
Section 2 . Annual Meetings . The Annual Meetings of Stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. Written notice of the Annual Meeting stating the place, date and hour of the meeting, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.
 
Section 3 . Special Meetings . Unless otherwise prescribed by law or by the Certificate of Incorporation (including any Certificates of Designation with respect to any Preferred Stock, the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may be called by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer (iii) the President, if there be one, (iii) the Secretary, (iv) the Chairman of the Executive Committee, or (v) any such officer at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a Special Meeting stating the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the purpose or purposes for which the meeting is called shall

be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting.
 
Section 4 . Quorum . Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.
 
Section 5 . Voting . Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, all voting shall be conducted in accordance with this Section 5. Directors shall be elected by a plurality of the votes of the shares present in person or represent by proxy at the meeting and entitled to vote on the election of directors. In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder or such other vote as set forth in the Certificate of Incorporation. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.
 
Section 6 . List of Stockholders Entitled to Vote . The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.
 
Section 7 . Stock Ledger . The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to vote in person or by proxy at any meeting of stockholders.
 
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Section 8 . Nomination of Directors . Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation of the Corporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 8 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 8.
 
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
 
To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided , however , that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs.
 
To be in proper written form, a stockholder’s notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated
 
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thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
 
No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 8. If the Chairman of the annual meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
 
Section 9 . Business at Annual Meetings . No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 9.
 
In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
 
To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided , however , that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs.
 
To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
 
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No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 9, provided , however , that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 9 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
 
ARTICLE III
 
DIRECTORS
 
Section 1 . Number and Election of Directors . The Board of Directors shall consist of not less than one nor more than fifteen members, the exact number of which shall be fixed from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III, as provided in the Certificate of Incorporation. Any director may resign at any time upon notice to the Corporation. Directors need not be stockholders. As used in these By-Laws, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.
 
Section 2 . Vacancies . Any vacancy on the Board of Directors, including due to newly created directorships resulting from any increase in the authorized number of directors, may only be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual shareholders meeting that is at least 120 days after the appointment of such directors and until their successors are duly elected and qualified, or until their earlier resignation or removal.
 
Section 3 . Duties and Powers . The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.
 
Section 4 . Meetings . The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, the Controlling Officer or any directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, electronic mail or in person on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.
 
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Section 5 . Quorum . Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these By-Laws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
 
Section 6 . Actions of Board . Unless otherwise provided by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.
 
Section 7 . Meetings by Means of Conference Telephone . Unless otherwise provided by the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting.
 
Section 8 . Committees . The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not the member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required.
 
Section 9 . Compensation . The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
 
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ARTICLE IV
 
OFFICERS
 
Section 1 . General . The officers of the Corporation shall be chosen by the Board of Directors and there shall be a Chairman of the Board of Directors (who must be a director), a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chief Executive Officer, President and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation.
 
Section 2 . Election . The Board of Directors at its first meeting held after each Annual Meeting of Stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.
 
Section 3 . Voting Securities Owned by the Corporation . Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by any officer of the Corporation and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
 
Section 4 . Chairman of the Board of Directors . The Chairman of the Board of Directors shall preside at all meetings of the stockholders and of the Board of Directors. Except where by law the signature of the Chief Executive Officer or President is required, the Chairman of the Board of Directors shall possess the same power as the Chief Executive Officer and President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to the Chairman by these By-Laws or by the Board of Directors.
 
Section 5 . Chief Executive Officer . At the request of the Chairman of the Board of Directors, or in such person’s absence, or in the event of such person’s inability or refusal to act, the Chief Executive Officer, if not also the Chairman of the Board of Directors, and then the President, if there be one, shall perform the duties of the Chairman of the Board of Directors, and when so acting, shall have all the powers of and be subject to all the restrictions upon the
 
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Chairman of the Board of Directors. The Chief Executive Officer, or in such person’s absence, or in the event of such person’s inability or refusal to act, the President, if there be one (such person, the “Controlling Officer”), shall, subject to the control of the Board of Directors and the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Controlling Officer shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the Controlling Officer. In the absence or disability of the Chairman of the Board of Directors, the Controlling Officer shall preside at all meetings of the stockholders and the Board of Directors. The Controlling Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to such person by these By-Laws or by the Board of Directors.
 
Section 6 . Controlling Officer Succession . At the request of the Controlling Officer, or in such person’s absence, or in the event of such person’s inability or refusal to act, or if there is no Controlling Officer, the officer designated by the Board of Directors shall perform the duties of the Controlling Officer and when so acting, shall have all the powers of and be subject to all the restrictions upon the Controlling Officer.
 
Section 7 . Secretary . The Secretary, or an Assistant Secretary, shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary, or an Assistant Secretary, also shall perform like duties for the standing committees when required. The Secretary, or an Assistant Secretary, shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board of Directors, or the Controlling Officer under whose supervision the Secretary and Assistant Secretaries shall be. If the Secretary and all Assistant Secretaries are unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, then the Board of Directors, the Chairman of the Board of Directors or the Controlling Officer may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer’s signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.
 
Section 8 . Treasurer . The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of
 
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Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Controlling Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all such officer’s transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office and for the restoration to the Corporation, in case of such person’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.
 
Section 9 . Assistant Secretaries . Except as may be otherwise provided in these By-Laws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chairman of the Board of Directors, the Controlling Officer, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of such person’s disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.
 
Section 10 . Assistant Treasurers . Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chairman of the Board of Directors, Controlling Officer, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of such person’s disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office and for the restoration to the Corporation, in case of such person’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in such person’s possession or under such person’s control belonging to the Corporation.
 
Section 11 . Other Officers . Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.
 
ARTICLE V
 
STOCK
 
Section 1 . Certificated and Uncertificated Shares . Shares of the Corporation’s stock may be certificated or uncertificated, as provided under Delaware law. All certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation
 
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as they are issued. The certificates shall be signed by (i) the Chairman of the Board of Directors, the Chief Executive Officer, the President or a Vice President and (ii) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, and certify the number of shares owned by such holder in the Corporation.
 
Section 2 . Signatures . Any signature required to be on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
 
Section 3 . Lost Certificates . The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
 
Section 4 . Transfers . Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the record holder of such stock, or by their attorney lawfully constituted in writing, and, in the case of stock represented by a certificate, upon the surrender of the certificate.
 
Section 5 . Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any such other corporate action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
 
Section 6 . Beneficial Owners . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
 
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ARTICLE VI
 
NOTICES
 
Section 1 . Notices . Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, facsimile, telex, cable, e-mail or electronic means.
 
Section 2 . Waivers of Notice . Whenever any notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director or member of a committee, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
 
ARTICLE VII
 
GENERAL PROVISIONS
 
Section 1 . Dividends . Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.
 
Section 2 . Disbursements . All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
 
Section 3 . Fiscal Year . The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
 
Section 4 . Corporate Seal . The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
 
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ARTICLE VIII
 
INDEMNIFICATION
 
Section 1 . Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action, suit or proceeding by or in the right of the Corporation) by reason of the fact that the person is or was an officer or employee of the Corporation, or is or was an officer or employee of the Corporation serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the defense of such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action, suit or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action, suit or proceeding, had reasonable cause to believe the person’s conduct was unlawful.
 
Section 2 . Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceedings by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was an officer or employee of the Corporation, or is or was an officer or employee of the Corporation serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense of such action, suit or proceedings if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any action, suit or proceedings, nor any claim, issue or matter, as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action, suit or proceedings was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
 
Section 3. Prepayment of Expenses . Actual and reasonable expenses (including attorneys’ fees) incurred by an officer or employee in defending a civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
 
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the indemnified person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII and such other conditions as shall be determined by or pursuant to delegated authority from the board.
 
Section 4 . Indemnity if Successful on the Merits . The Corporation shall indemnify any present or former officer or employee of the Corporation if such person has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article VIII, or in defense of any claim, issue or matter therein, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
 
Section 5 . Exercise of Powers . Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former officer or employee is proper in the circumstances because the person has met the applicable standard of conduct set forth in this Article VIII. Such determination shall be made with respect to a person who is an officer at the time of such determination (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by majority vote of the stockholders. The exercise of the power to indemnify and advance expenses by the Corporation pursuant to this Article VIII shall not be deemed to limit any other exercise or restriction of such powers by the Corporation, provided, that any repeal or modification of this Article VIII shall not adversely affect any right or protection of any person in respect to any act or omission occurring prior to the time of such repeal or modification.
 
Section 6 . Indemnification by a Court . Notwithstanding any contrary determination or absence of determination in a specific case under Section 5 of this Article VIII, any officer or employee may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1, 2 and 4 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the officer or employee is proper in the circumstances because such person has met the applicable standards of conduct set forth in Section 1, 2 or 4 of this Article VIII, as the case may be. Neither a contrary determination nor the absence of a determination in a specific case under Section 5 of this Article VIII shall be a defense to such application or create a presumption that the officer or employee seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 6 shall be given to the Corporation promptly upon the filing of such application.
 
Section 7 . Survival of Indemnification and Advancement of Expenses . The indemnification and advancement of expenses provided by, or granted pursuant to this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be an officer or employee and shall inure to the benefit of the heirs, executors and administrators of such a person.
 
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Section 8 . Applicable Law . The rights granted under this Article VIII shall be limited to the extent any applicable laws limit such rights to indemnity or the power to indemnify.
 
Section 9. Certain Definitions . For purposes of this Article VIII the following definitions shall apply.
 
“Acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action, suit or proceeding, had no reasonable cause to believe their conduct was unlawful” shall include, but not be limited to, actions based on the following information from the Corporation or other corporation, partnership, joint venture, trust, employee benefit plan, or enterprise to which the person is or was serving at the request of the Corporation (for purposes of this definition only, an “Enterprise”): records or books of account of the Corporation or Enterprise, information supplied by an officer of the Corporation or Enterprise in the course of their duties, advice of legal counsel for the Corporation or Enterprise, or information or records given or reports made to the Corporation or Enterprise by an independent certified public accountant, appraiser or other expert selected with reasonable care by the Corporation or Enterprise.
 
“Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers or employee so that any person who is or was a director, officer or employee of such constituent corporation, or is or was a director, officer or employee of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provision of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
 
“Fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan.
 
“Not opposed to the best interest of the corporation” shall include actions taken in good faith in service to an employee benefit plan that the person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan.
 
Section 10. Indemnification of Directors . Directors of the Corporation shall be entitled to indemnification and advancement of expenses as provided in the Certificate of Incorporation.
 
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Exhibit 10.2
 
EMPLOYEE MATTERS AGREEMENT
 
THIS EMPLOYEE MATTERS AGREEMENT is made as of [              ], 2006 between First Data Corporation, a Delaware corporation (“ First Data ”), and The Western Union Company, a Delaware corporation (“ Western Union ”) and, as of the date hereof, a wholly-owned subsidiary of First Data.
 
RECITALS
 
A. First Data and Western Union have entered into a Separation and Distribution Agreement dated as of [              ], 2006 (the “ Distribution Agreement ”) pursuant to which First Data will distribute on a pro rata basis to the holders of First Data’s Common Stock, $0.01 par value per share (“ First Data Common Stock ”), without any consideration being paid by the holders of such First Data Common Stock, all of the outstanding shares of Western Union’s Common Stock, $0.01 par value per share (“ Western Union Common Stock ”) then owned by First Data (the “ Distribution ”).
 
B. In connection with the Distribution, First Data and Western Union desire to enter into this Employee Matters Agreement.
 
In consideration of the mutual promises contained herein and in the Distribution Agreement, the parties hereto agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
1.01 Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Distribution Agreement. As used in this Agreement:
 
“ Agreement ” means this Employee Matters Agreement together with those parts of the Distribution Agreement referenced herein and all Schedules hereto and all amendments, modifications and changes hereto and thereto.
 
“ Business Employee ” means a Transferred Employee or any other individual employed at any time on or prior to the Distribution Date by Western Union or any of its Subsidiaries or Affiliates who has, as of the Distribution Date, or who, immediately prior to his or her termination of employment with all of First Data, its Subsidiaries and their respective Affiliates, had employment duties primarily related to the Transferred Business.
 
“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at Section 4980B of the Code, as amended.
 
“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.
 
“ Domestic Business Employee ” means a Business Employee who is located in the United States or who is an expatriate Business Employee employed by a Western Union U.S.

entity but who is performing services outside of the United States for a temporary period of time at the request of his employer.
 
“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1001, et . seq .
 
“ First Data Non-ERISA Benefit Arrangement ” means any Non-ERISA Benefit Arrangement sponsored or maintained by First Data.
 
“ First Data Plan ” means any Pension Plan or Welfare Plan sponsored or maintained by First Data.
 
“ IRS ” means the U.S. Internal Revenue Service.
 
“ Non-Domestic Business Employee ” means a Business Employee who is located outside the United States or who is an inpatriate Business Employee in the U.S. employed by a Western Union Non-U.S. entity but who is performing services in the United States for a temporary period of time at the request of his employer.
 
“ Non-ERISA Benefit Arrangement ” means any contract, agreement, policy, practice, program, plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for benefits, perquisites or compensation of any nature to any Business Employee, or to any family member, dependent or beneficiary of any such Business Employee, including, without limitation, disability, severance, health, dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or bereavement days, holidays, retirement, deferred compensation, profit sharing, bonus, stock-based compensation or other forms of incentive compensation.
 
“ Pension Plan ” means any pension plan as defined in Section 3(2) of ERISA, without regard to Section 4(b)(4) or 4(b)(5) of ERISA.
 
“ Transferred Employee ” means an employee of First Data or any First Data Subsidiary (other than Western Union or any Western Union Subsidiary) whose employment is transferred to Western Union immediately prior to the Distribution Date, as provided in Article II.
 
“ Welfare Plan ” means any employee welfare plan as defined in Section 3(1) of ERISA, without regard to Section 4(b)(4) or 4(b)(5) of ERISA.
 
1.02 In this Agreement, unless the context clearly indicates otherwise:
 
(a) words used in the singular include the plural and words used in the plural include the singular;
 
(b) references to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;
 
(c) references to any gender includes the other gender;
 
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(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;
 
(e) references to any Article, Section or Schedules means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
 
(f) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
 
(g) references to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
 
(h) references to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
 
(i) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;
 
(j) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;
 
(k) if there is any conflict between the provisions of the Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof; if there is any conflict between the provisions of the body of this Agreement and the Schedule hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Schedule;
 
(l) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;
 
(m) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Affiliates to take such action or refrain from taking such action, as the case may be; and
 
(n) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.
 
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ARTICLE II
 
ASSIGNMENT OF EMPLOYEES
 
Effective immediately prior to the Distribution Date, the employment of the Transferred Employees by First Data shall be terminated and thereupon shall commence with and shall be assigned and transferred to Western Union or a Western Union Subsidiary. Notwithstanding anything set forth below or herein to the contrary, nothing in this Agreement shall create any obligation on the part of any Western Union Party to continue the employment of any employee for any definite period following the Distribution Date or to change the employment status of any employee from “at will.” Notwithstanding the foregoing, if and only to the extent necessary to preserve payroll, benefits, or other legal entitlements with respect to employees outside the United States, a Western Union Party and a First Data Party may enter into one or more agreements whereby such Party may lease employees from the other company or its Subsidiary for a period of not more than three calendar months following the Distribution Date. Any such agreement(s) shall require the company benefiting from the services of such employee(s) to fully reimburse the leasing company for the full cost of the employee(s) remuneration and shall contain other terms and conditions consistent with an arm’s length commercial relationship between the leasing entity and the service recipient.
 
ARTICLE III
 
PENSION PLANS
 
3.01 U.S. Defined Contribution Plans.
 
(a) Western Union ISP.
 
(1) Establishment of Western Union Company Incentive Savings Plan . On or before, but effective as of the close of business on the Distribution Date, Western Union shall adopt, establish and maintain a 401(k) profit sharing Pension Plan and trust intended to be qualified under Section 401(a) of the Code and exempt from federal income tax under Section 501(a) of the Code (the “ Western Union ISP ”). As soon as practicable after the adoption of the Western Union ISP, Western Union shall submit an application for determination to the IRS for a determination that the Western Union ISP is qualified under Section 401(a) of the Code and that the related trust is exempt from federal income tax under Section 501(a) of the Code, and shall take any actions not inconsistent with Western Union’s other general commitments contained in this Agreement and make any amendments necessary to receive such determination.
 
(2) Transfer of Account Balances and Unallocated Amounts . As soon as administratively practicable after the Distribution Date, there shall be transferred from the First Data Corporation Master Trust for Defined Contribution Plans (“ DC Master Trust ”) to the trust established by Western Union for the Western Union ISP assets having a value as of the applicable valuation date that are equal to the value of the account balances of, and liabilities with respect to, all Business Employees (other than Business Employees whose employment has
 
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terminated prior to the Distribution Date and other than Business Employees located in Puerto Rico) with an account balance under the First Data Corporation Incentive Savings Plan (“ First Data ISP ”) as of such valuation date. In addition, as soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the trust established by Western Union to hold Western Union ISP assets a pro rata share of all unallocated amounts held in the DC Master Trust (other than unallocated forfeitures attributable to the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees), determined based upon the ratio of the sum of the account balances of the Business Employees described in the immediately preceding sentence as of the applicable valuation date to the sum of all account balances held in the DC Master Trust as of such valuation date. Such transferred assets shall be in cash, shares of securities, promissory notes evidencing outstanding plan loans of such Business Employees, and shares of First Data Common Stock and Western Union Common Stock, and such transfer shall be made in accordance with Section 414(l) of the Code. Liabilities under any qualified domestic relations orders (as defined in Section 414(p) of the Code) received with respect to any accounts transferred to the Western Union ISP shall be transferred to and assumed by the Western Union ISP at the time such assets attributable to such accounts are transferred. Western Union shall assume and thereafter be solely responsible for all then existing and future employer liabilities related to such Business Employees under the Western Union ISP and the administration thereof, and the First Data Parties shall have no liability therefor.
 
(b) Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees . Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees (the “ RSP ”). As soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the trust established by Western Union Financial Services, Inc. (or its designee) for the RSP assets (the “ RSP Trust ”) having a value as of the applicable valuation date that are equal to the value of the account balances of, and liabilities with respect to, the RSP as of such valuation date. In addition, as soon as administratively practicable after the Distribution Date, there shall be transferred from the DC Master Trust to the RSP Trust all unallocated forfeitures attributable to the RSP as well as a pro rata share of all other unallocated amounts held in the DC Master Trust, determined based upon the ratio of the sum of the account balances of the RSP as of the applicable valuation date to the sum of all account balances held in the DC Master Trust as of such valuation date. Following the date of such asset transfer, the First Data Parties shall have no liability relating to the RSP.
 
(c) Western Union Pension Plan and Western Union Financial Services, Inc. Pension Plan . Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Pension Plan and the Western Union Financial Services, Inc. Pension Plan. As soon as administratively practicable after the Distribution Date, there shall be retitled in the name of the Western Union Master Pension Trust as established by Western Union Financial Services, Inc. (or its designee) assets having a value as of the applicable valuation date that are equal to the
 
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value of the accrued benefits of, and liabilities with respect to, the Western Union Pension Plan and the Western Union Financial Services, Inc. Pension Plan as of such valuation date, as determined by First Data and Western Union. Following the date of the transaction contemplated in the immediately preceding sentence, the First Data Parties shall have no liability arising out of or otherwise with respect to the Western Union Pension Plan or the Western Union Financial Services, Inc. Pension Plan.
 
3.02 Supplemental Non-Qualified Deferred Compensation Plan . On or before, but effective as of the close of business on Distribution Date, Western Union shall adopt a non-qualified deferred compensation plan (the “ Western Union Supplemental Incentive Savings Plan ”). Western Union shall assume, and shall cause the Western Union Supplemental Incentive Savings Plan to assume, responsibility for all liabilities and fully perform, pay and discharge all obligations, when such obligations become due, to the Business Employees under the First Data Corporation Supplemental Incentive Savings Plan (“ SISP-1 and SISP-2 ”) immediately prior to the Distribution Date. Following such date, the First Data Parties shall have no liability arising out of or otherwise with respect to the SISP-1 and SISP-2.
 
3.03 Non-U.S. Retirement Plans . Following the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries to continue to maintain in full force and effect retirement plans as were sponsored and maintained by such Subsidiaries immediately prior to the Distribution Date, and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants or former participants in such plans with respect to their participation therein. In addition, effective either prior to or as of the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries in the United Kingdom, Japan, Canada, and Australia to adopt retirement plans with appropriate eligibility and benefits terms to ensure that Non-Domestic Business Employees in such countries are either (1) eligible to participate in the same type of plan and enjoy the same level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), or (2) eligible to participate in a plan intended to provide a comparable level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier).
 
ARTICLE IV
 
WELFARE PLANS
 
4.01 Western Union Financial Services, Inc. Health and Welfare Benefit Plan . Following the Distribution Date, Western Union Financial Services, Inc. shall continue to be the plan sponsor of the Western Union Financial Services, Inc. Health and Welfare Benefit Plan, and the First Data Parties shall have no liability relating to such plan. The Western Union Financial Services, Inc. Health and Welfare Benefit Plan covers only collectively bargained employees. As of the date of this Agreement, all eligible non-union Domestic Business Employees participate in the First Data Corporation Health and Welfare Benefit Plan.
 
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4.02 Continued Participation in First Data U.S. Welfare Plans; Establishment of Separate U.S. Welfare Plan Contracts . For the period beginning at the close of business on the Distribution Date and ending as of 11:59 p.m. on December 31, 2006, all eligible non-union Domestic Business Employees shall continue to be eligible to participate in the First Data Corporation Health and Welfare Benefit Plan. First Data and Western Union shall take reasonable steps to have separate provider contracts established under the terms of the First Data Corporation Health and Welfare Benefit Plan to provide coverage to Domestic Business Employees during such period. In consideration for the continued participation of the eligible non-union Domestic Business Employees in the First Data Corporation Health and Welfare Benefit Plan through December 31, 2006, Western Union shall pay to First Data, or reimburse it for, such amounts as are set forth in the Health and Life Benefits Schedule to the Transition Services Agreement.
 
4.03 Western Union’s Welfare Plans . (a) On or before, but effective as of January 1, 2007, Western Union shall have adopted for the benefit of eligible Domestic Business Employees and their respective eligible dependents, health (including medical, vision and dental), life, accidental death and dismemberment, disability and other Welfare Plans as determined by Western Union (the “ Western Union Welfare Plans ”). Domestic Business Employees shall be eligible to participate in the Western Union Welfare Plans as of January 1, 2007 on the terms established by Western Union.
 
(b) Following the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries to continue to maintain in full force and effect Welfare Plans as were sponsored and maintained at such Subsidiaries immediately prior to the Distribution Date, and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants or former participants in such plans with respect to their participation therein. First Data and Western Union shall have separate provider contracts established for employees of First Data and Western Union Non-U.S. Subsidiaries effective on or prior to the Distribution Date. In addition, effective either prior to or as of the Distribution Date, Western Union shall cause its Non-U.S. Subsidiaries in the United Kingdom, Japan, Canada, and Australia to adopt Welfare Plans with appropriate eligibility and benefits terms, to ensure that Non-Domestic Business Employees in such countries are either (1) eligible to participate in the same type of plan and enjoy the same level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), or (2) eligible to participate in a plan intended to provide a comparable level of benefits for which such Non-Domestic Business Employees were eligible immediately prior to the Distribution Date (or date of plan adoption, if earlier), and neither First Data nor any First Data Subsidiary shall have any liability or obligation with respect to such plans or any participants in such plans.
 
4.04 Welfare Plan Liabilities.
 
(a) Western Union Liabilities . Except as otherwise provided in this Agreement, Western Union shall assume, and be solely responsible for all First Data and Western Union Welfare Plan liabilities incurred by any Business Employee on or after the Distribution Date.
 
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(b) First Data Liabilities . First Data shall continue to be responsible after the Distribution Date for employer liabilities under the First Data Corporation Health and Welfare Benefit Plan and any Non-U.S Welfare Benefit Plan incurred with respect to Business Employees and their eligible dependents only with respect to the following (except as otherwise provided in this Agreement):
 
(1) Continuation Coverage for Terminated Domestic Business Employees and their Dependents . Any Domestic Business Employee whose employment terminates prior to January 1, 2007 for any reason, including a Domestic Business Employee currently receiving First Data Corporation Health and Welfare Plan benefits pursuant to a termination agreement or an “Agreement and Release” under the applicable First Data severance policy, and any dependent of such Domestic Business Employee, who elected or is eligible to elect, pursuant to rights under COBRA or any comparable state law, to continue participation in the First Data Corporation Health and Welfare Benefit Plan on the applicable date of termination;
 
(2) Disabled Persons . First Data shall continue to be responsible after the Distribution Date for all claims for long-term disability incurred prior to the Distribution Date by any non-union Domestic Business Employee who is absent from active employment due to a total disability, as defined in the First Data Corporation Health and Welfare Benefit Plan, on or prior to the Distribution Date to the extent that such long-term disability benefits are provided under an insurance contract. First Data shall also be responsible for long-term disability benefits for any Domestic Business Employee who is receiving weekly short-term disability benefits as of the Distribution Date and who becomes eligible for long-term disability benefits thereafter, provided that the total disability relates to the same condition for which weekly short-term disability benefits were paid and, provided further, that such long-term disability benefits are payable under an insurance contract. Western Union shall assume and be solely responsible for all other claims for long-term disability payable on or after the Distribution Date with respect to any Business Employee and shall continue to be responsible for all claims for short-term disability benefits for any Domestic Business Employee, without regard to when the disability occurred.
 
4.05 Flexible Spending Accounts . For the period beginning at the close of business on the Distribution Date and ending as of 11:59 p.m. on December 31, 2006, all eligible non-union Domestic Business Employees shall continue to be eligible to participate in the First Data Flexible Spending Account Plan (the “ First Data FSA ”). Payflex, the current First Data FSA vendor, shall maintain the flexible spending account balances for all Domestic Business Employees under the First Data FSA as of December 31, 2006. All 2006 Claims made by Domestic Business Employees shall be submitted to Payflex. Any forfeitures attributable to Domestic Business Employees under the First Data FSA which occur after all 2006 Claims have been processed by Payflex shall be used by First Data as permitted under applicable regulations and an equivalent amount reimbursed to Western Union. For purposes of this Section 4.05, the term “ 2006 Claims ” means: (i) any claims by Domestic Business Employees incurred on or prior to December 31, 2006, and (ii) any claims by Domestic Business Employees incurred through March
 
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15, 2007 and which are designated by the Domestic Business Employees to be offset against their respective December 31, 2006 balances under the First Data FSA. Effective January 1, 2007, Western Union shall adopt and maintain a flexible spending account plan (the “ Western Union FSA ”) with a new FSA vendor. All claims incurred under the Western Union FSA by Domestic Business Employees shall be made to the new Western Union FSA vendor.
 
4.06 First Data Assets . First Data shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of the First Data Corporation Health and Welfare Benefit Plan.
 
ARTICLE V
 
EQUITY COMPENSATION PLANS
 
5.01 Stock Options.
 
(a) First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors, so that options issued under the First Data Corporation 1992 Long Term Incentive Plan, the 2002 First Data Corporation Long Term Incentive Plan, the First Data Corporation 1993 Director’s Stock Option Plan, the Concord EFS, Inc. 1993 Incentive Stock Option Plan, the Concord EFS, Inc. 2002 Stock Option Plan, and the Star Systems, Inc. 2000 Equity Incentive Plan (collectively, the “ First Data LTIPs ”) to purchase First Data Common Stock (“ First Data Stock Options ”) held at the close of business on the Distribution Date by current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees and Business Employees whose employment terminated prior to the Distribution Date (or their respective transferees) shall be replaced pursuant to the terms of the First Data LTIPs with an adjusted First Data Stock Option with an adjusted exercise price and a substitute option issued under The Western Union Company 2006 Long Term Incentive Plan or The Western Union Company 2006 Non-Employee Directors’ Equity Plan (collectively the “ Western Union LTIP s”) to purchase Western Union Common Stock (a “ Western Union Stock Option ”). Such replacement will be implemented in a manner such that immediately following the Distribution (i) the number of shares relating to the adjusted First Data Stock Option will be equal to the number of shares of First Data Common Stock subject to such option immediately prior to the Distribution, (ii) the number of shares subject to the substitute Western Union Stock Option will be equal to the number of shares of Western Union Common Stock that the option holder would have received in the Distribution had the First Data Common Stock subject to the option represented outstanding shares of First Data Common Stock, and (iii) the per share option exercise price of the original First Data Stock Option will be proportionally allocated between such separate stock options based upon the relative per share trading prices of First Data Common Stock and Western Union Common Stock immediately following the Distribution, with the intention that such adjustment and substitution satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred
 
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compensation subject to Section 409A of the Code. Each adjusted First Data Option and substituted Western Union Option adjusted from or substituted for an original First Data Option described in this Section 5.01(a) , when combined, will in the exclusive and sole discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of such original First Data Option, and each will preserve the ratio from the original option of the exercise price to the fair market value of the stock subject to the option. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.
 
(b) First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors, so that First Data Stock Options held at the close of business on the Distribution Date by a Business Employee, other than a Business Employee whose employment terminated prior to the Distribution Date, and each First Data Stock Option held by a director of First Data who will become a director of Western Union on or before the Distribution Date (or their respective transferees) will, pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, be replaced with a substitute Western Union Stock Option issued under the Western Union LTIPs, with the intention that such substitution satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Each such substitute option will in the absolute discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Stock Option for which it is substituted and the ratio in the original option of the exercise price to the fair market value of the stock by adjusting for the such number of shares purchasable and the exercise price, based on a comparison of the trading price of First Data Common Stock on the last trading day immediately prior to the Distribution, which includes the value of Western Union, and the trading price of Western Union Common Stock on the first trading day immediately after the Distribution. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.
 
5.02 Restricted Stock . First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees, and Business Employees whose employment terminated prior to the Distribution Date, (or their respective transferees) and who on the Distribution Date hold shares of First Data Common Stock issued under one or more First Data LTIPs that are subject to restrictions on sale and transfer (“ First Data Restricted Stock ”) receive shares of Western Union Common Stock that are subject to restrictions on sale and transfer (“ Western Union Restricted Stock ”) in connection with the Distribution under the applicable Western Union LTIP based upon the number of shares of First Data Restricted Stock they hold. First Data and Western Union shall take
 
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any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that the shares of First Data Restricted Stock held by Business Employees, other than Business Employees whose employment terminated prior to the Distribution Date, and any First Data director who will become a director of Western Union on or before the Distribution Date, (or their respective transferees) will be replaced with substitute shares of Western Union Restricted Stock issued under the applicable Western Union LTIP. Each such substitute Western Union Restricted Stock award will in the absolute discretion of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Restricted Stock award for which it was substituted by adjusting the number of restricted shares based on a comparison of the trading price of First Data Common Stock on the last trading date immediately prior to the Distribution, which includes the value of Western Union, and the trading price of Western Union Common Stock on the first trading date immediately after the Distribution. All employment with both First Data and Western Union shall be taken into account for purposes of determining when the restrictions on the sale and transfer of such shares lapse. Such substitution and replacement shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.
 
5.03 Restricted Stock Units . First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that current and former employees and directors of First Data and its Subsidiaries and Affiliates who will not be Transferred Employees and Business Employees whose employment terminated prior to the Distribution Date (or their respective transferees) will have each of their First Data Restricted Stock Units (as defined in the First Data LTIPs) replaced with an adjusted First Data Restricted Stock Unit and a substitute Western Union restricted stock unit issued under the Western Union LTIPs (“ Western Union Restricted Stock Unit ”). The number of Western Union Restricted Stock Units issued in replacement for such First Data Restricted Stock Units shall be calculated so that immediately following the Distribution (i) the number of First Data Restricted Stock Units will be equal to the number of First Data Restricted Stock Units held by the participant immediately prior to the Distribution, and (ii) the number of Western Union Restricted Stock Units will be equal to the number of shares of Western Union Common Stock that the holder of the restricted stock unit would have received in the Distribution had the First Data Restricted Stock Unit represented outstanding shares of First Data Common Stock. First Data and Western Union shall take any and all action as shall be necessary or appropriate, including without limitation, approval of the provisions of this Article V by the Western Union Board of Directors and the Compensation Committee of the First Data Board of Directors pursuant to the terms of the applicable First Data LTIP and the applicable Western Union LTIP and this Agreement, so that each First Data Restricted Stock Unit held by a Business
 
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Employee (or their respective transferees), other than a Business Employee whose employment terminated prior to the Distribution Date, will be replaced with a substitute Western Union Restricted Stock Unit issued under the applicable Western Union LTIP. It is intended that each substitute restricted stock unit will in the sole and absolute judgment of the Compensation Committee of the First Data Board of Directors preserve the intrinsic value of the original First Data Restricted Stock Unit for which it was substituted by representing a number of Western Union Restricted Stock Units based on a comparison of the trading price of First Data Common Stock on the last trading date immediately prior to the Distribution, which includes the value of Western Union, and the trading price of Western Union Common Stock on the first trading date immediately after the Distribution. Such substitute Western Union Restricted Stock Units will take into account all employment with both First Data and Western Union, and their respective Subsidiaries and Affiliates, for purposes of determining when the restricted stock unit vests. Such substitution and replacement shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code. Fractional shares shall be adjusted or compensated by First Data as appropriate in the sole discretion of the Compensation Committee of the First Data Board of Directors.
 
5.04 Approval and Terms of Equity Awards . By its approval of this Article V , the Board of Directors of Western Union, as issuer of substitute and replacement awards provided hereunder, and the Compensation Committee of the Board of Directors of First Data, as sole shareholder of Western Union, hereby adopt and approve, respectively, the issuance of the substitute and replacement options and awards provided for herein. Except as set forth above, the terms of the First Data LTIPs and of the outstanding equity compensation awards held by participants under the First Data LTIPs and this Agreement and the substitute Western Union equity awards shall be subject to the terms of such plans and applicable award agreements. Notwithstanding the foregoing, substitute awards made under the Western Union LTIPs pursuant to Western Union’s obligations under this Agreement shall take into account all employment with both First Data and Western Union, and their respective Subsidiaries and Affiliates, for purposes of determining when such awards vest and terminate. Such substitution shall be intended to satisfy the requirements of Section 424 of the Code and avoid treatment as non-qualified deferred compensation subject to Section 409A of the Code.
 
5.05 No Change of Control . The Distribution will not constitute a “change of control” for purposes of First Data equity awards which are outstanding as of the Distribution Date.
 
5.06 Establishment of Western Union Equity Plans . Effective as of the Distribution Date, Western Union shall establish the Western Union LTIPs to provide for awards which include the following: (i) stock options (both qualified and nonqualified), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock unit awards, (v) phantom stock units, (vi) performance grants and (vii) bonus awards, including, without limitation, the awards provided for herein. In exercising its power and authority hereunder with respect to replacement and substitute stock-based awards held by employees of First Data, Western Union shall, in good faith, cooperate with and give due regard to any information provided by First Data.
 
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ARTICLE VI
 
COMPENSATION MATTERS
AND GENERAL BENEFIT MATTERS
 
6.01 Cessation of Participation in First Data Plans and Non-ERISA U.S. Benefit Arrangements . Except as otherwise provided in this Agreement or as required by the terms of any First Data Plan or First Data Non-ERISA Benefit Arrangement, or by applicable law, First Data and Western Union shall take any and all action as shall be necessary or appropriate so that participation in First Data Plans and First Data Non-ERISA Benefit Arrangements by all Business Employees shall terminate as of the close of business on the Distribution Date and Western Union shall cease to be a participating employer under the terms of such First Data Plans and First Data Non-ERISA Benefit Arrangements as of such time.
 
6.02 Assumption of Certain Employee Related Obligations . Except as otherwise provided in this Agreement, effective as of the close of business on the Distribution Date, Western Union shall assume, and none of First Data or any of its Subsidiaries or Affiliates shall have any further liability for, the following agreements, obligations and liabilities and Western Union shall indemnify First Data and its Subsidiaries and Affiliates, and the officers, directors, and employees of each, and hold them harmless with respect to such agreements, obligations or liabilities:
 
(a) Agreements entered into between First Data, its Subsidiaries or Affiliates and Business Employees.
 
(b) Agreements entered into between First Data, its Subsidiaries or Affiliates and independent contractors providing services solely to the Transferred Business.
 
(c) All collective bargaining agreements, collective agreements, trade union, or works council agreements entered into between First Data, its Subsidiaries or Affiliates and any union, works council, or other body representing only Business Employees.
 
(d) All wages, salary, incentive compensation, commissions and bonuses payable to Business Employees on or after the Distribution Date, without regard to when such wages, salary, incentive compensation, commissions and bonuses are or may have been earned.
 
(e) All moving expenses and obligations related to relocation, repatriation, transfers, or similar items incurred by or owed to Business Employees [except those listed on Schedule 6.02(e) hereto].
 
(f) All immigration-related, visa, work application, or similar rights, obligations and liabilities related to Business Employees.
 
(g) All liabilities and obligations whatsoever of the Transferred Business with respect to claims made by or with respect to Business Employees or any other persons who at any time prior to the Distribution Date had employment duties primarily related to
 
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the Transferred Business relating to any employee benefit plan, program or policy not otherwise retained or assumed by First Data pursuant to this Agreement, including such liabilities relating to actions or omissions of or by Western Union or any officer, director, employee or agent thereof prior to the Distribution Date.
 
6.03 Restrictive Covenants in Employment and Other Agreements . To the extent permitted under applicable law, following the Distribution, Western Union and its Subsidiaries and Affiliates shall be considered to be successors to First Data and its Subsidiaries and Affiliates for purposes of all agreements containing restrictive covenants (including but not limited to confidentiality and non-competition provisions) between First Data (or a First Data Subsidiary or Affiliate) and Business Employees, employees of First Data (or a First Data Subsidiary or Affiliate) as of the Distribution Date that Western Union reasonably determines have substantial knowledge of the Transferred Business, former employees and independent contractors executed prior to the Distribution Date such that each of First Data, Western Union and their respective Subsidiaries and Affiliates shall all enjoy the rights and benefits under such agreements, with respect to such party’s and their respective Subsidiaries” and Affiliates’ business operations; provided , however , that (a) in no event shall First Data be permitted to enforce the restrictive covenant agreements against Business Employees in their capacity as employees of Western Union or its Subsidiaries, and (b) in no event shall Western Union be permitted to enforce the restrictive covenants agreements of First Data employees in their capacity as employees of First Data or its Subsidiaries.
 
6.04 Severance . Effective as of the Distribution Date, Western Union may establish one or more severance plans and policies with respect to Business Employees as Western Union deems appropriate in its discretion. First Data shall have no liability or obligation under any First Data severance plan or policy with respect to Business Employees whose employment terminates on or after the Distribution Date. Following the Distribution Date, First Data shall continue to be responsible for administering all payments and benefits under the applicable First Data severance policies or any termination agreements with Business Employees, with respect to Business Employees whose employment has terminated prior to the Distribution Date for an eligible reason under such policies or in accordance with such agreements; provided that Western Union shall reimburse, and shall indemnify First Data, and its Subsidiaries and Affiliates, for any amounts payable to Business Employees under such policies and that Western Union shall be charged for the continuation of Welfare Plan benefits to such terminated Business Employees and their dependents on and after the Distribution Date on terms consistent with the methodology specified in the Health and Life Benefits Schedule to the Transition Services Agreement. First Data agrees to indemnify Western Union against any loss or liability resulting from First Data’s gross negligence, willful misconduct or bad faith in the administration of its severance policies or any termination agreement with a Business Employee. It is not intended that any Business Employee will be eligible for termination or severance payments or benefits from First Data or its Subsidiaries or Affiliates as a result of the transfer or change of employment from First Data to Western Union or their respective Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in the event that any such termination or severance payments or benefits become payable on account of such transfer, change or the refusal of a Business Employee to accept employment with Western Union, Western Union shall indemnify First Data, and its Subsidiaries and Affiliates, for the amount of such termination or severance payments or benefits.
 
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6.05 Past Service Credit . With respect to all Domestic Business Employees, Western Union shall recognize all service recognized under the comparable First Data Plans and First Data Non-ERISA Benefit Arrangements for purposes of determining eligibility, participation, vesting, and calculation of benefits under Western Union’s comparable plans and programs, provided that there shall be no duplication of benefits for Business Employees under Western Union’s plans and programs. First Data will provide to Western Union copies of any records available to First Data to document such service, plan participation and membership and cooperate with Western Union to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to such Domestic Business Employees. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such information, First Data and Western Union shall each comply with all applicable laws, regulations and internal policies and each party shall indemnify and hold harmless the other party from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party) to so comply with all applicable laws, regulations and internal policies applicable to such information.
 
6.06 Accrued Vacation Days Off . Western Union shall recognize and assume all liability for all vacation, holiday, sick leave, flex days and personal days off, including banked vacation, accrued by Business Employees as of the Distribution Date and Western Union shall credit each Business Employee with such days off accrual.
 
6.07 Leaves of Absence . Western Union will continue to apply the leave of absence policies maintained by First Data to inactive Business Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by Business Employees prior to the Distribution Date shall be deemed to have been taken as employees of Western Union.
 
6.08 First Data Assets . Except as otherwise set forth herein, First Data shall retain all reserves, bank accounts, trust funds or other balances maintained with respect to First Data’s Non-ERISA Benefit Arrangements.
 
6.09 Further Cooperation/Personnel Records/Data Sharing . The parties shall provide each other such records and information only as necessary or appropriate to carry out their obligations under law, this Agreement, or for the purposes of administering the Western Union plans and policies. The parties shall take commercially reasonable actions so that after the Distribution, Western Union equity awards issued to individuals who immediately after the Distribution remain employees and directors of First Data or its Subsidiaries or Affiliates can be administered by First Data. Subject to applicable law, all information and records regarding employment and personnel matters of Business Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by Western Union in accordance with all laws and policies relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. Access to such records after the Distribution Date will be provided to First Data in accordance with Article [          ] of the Distribution Agreement. Notwithstanding the foregoing, First Data shall retain reasonable access to those records necessary for First Data’s continued administration of any plans or programs on behalf of Business Employees after the Distribution Date, provided that such access shall be limited to
 
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individuals who have a job-related need to access such records. First Data shall also retain copies of all confidentiality and non-compete agreements with any Business Employee in which First Data has a valid business interest. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such information, First Data and Western Union shall each comply with all applicable laws, regulations and internal policies, and each party shall indemnify and hold harmless the other party from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party) to so comply with all applicable laws, regulations and internal policies applicable to such information.
 
ARTICLE VII
 
GENERAL PROVISIONS
 
7.01 Preservation of Rights to Amend . The rights of First Data or Western Union to amend or terminate any plan, program, or policy referred to herein shall not be limited in any way by this Agreement.
 
7.02 Confidentiality . Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of the confidentiality provisions set forth in Section 14.8 of the Distribution Agreement.
 
7.03 Administrative Complaints/Litigation . Except as otherwise provided in this Agreement, as of and after the Distribution Date, Western Union shall assume, and be solely liable for, the handling, administration, investigation, and defense of actions, including, without limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims, asserted at any time against First Data or Western Union by any Business Employee (including any dependent or beneficiary of a Business Employee), or any other person to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with the Transferred Business. Any Losses arising from such actions shall be deemed Assumed Liabilities under the Distribution Agreement.
 
7.04 Reimbursement and Indemnification . The parties hereto agree to reimburse each other, within 30 days of receipt from the other party of appropriate verification, for all costs and expenses which each may incur on behalf of the other as a result of any of the Welfare Plans, Pension Plans and Non-ERISA Benefit Arrangements and, as contemplated by Section 6.04, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by Western Union pursuant to this Agreement, and all liabilities retained, assumed or indemnified against by First Data pursuant to this Agreement, shall in each case shall be subject to the indemnification provisions of Article XII of the Distribution Agreement.
 
7.05 Entire Agreement . This Agreement, including the Schedules hereto and the sections of the Distribution Agreement referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all
 
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prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.
 
7.06 Choice of Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware.
 
7.07 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.
 
7.08 Waiver . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
 
7.09 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
 
7.10 Execution in Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the Parties.
 
7.11 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided, however, that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
 
7.12 Notices . All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when delivered or mailed in accordance with the terms of Section 15.9 of the Distribution Agreement.
 
7.13 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Affiliate of such Party.
 
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7.14 No Public Announcement . Neither First Data nor Western Union shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that either Party shall be so obligated by law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with applicable law, accounting and SEC disclosure obligations or the rules of any stock exchange.
 
7.15 Limited Liability . Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of such Party under this Agreement and, to the fullest extent legally permissible, each of Western Union and First Data, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law.
 
7.16 Mutual Drafting . This Agreement shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.
 
7.17 Dispute Resolution . The Parties agree that any dispute, controversy or claim between them with respect to the matters covered hereby shall be governed by and resolved in accordance with the procedures set forth in Article XIII of the Distribution Agreement.
 
7.18 No Third Party Beneficiaries . No Business Employee or other current or former employee of First Data or Western Union or any Subsidiary or Affiliate of either (or his/her spouse, dependent or beneficiary), or any other person not a party to this Agreement, shall be entitled to assert any claim hereunder. The provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.
 
7.19 Effect if Distribution Does Not Occur . Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.
 
7.20 Corporate Authorization . The officers of First Data and Western Union are hereby authorized, empowered and directed, in the name and on behalf of each of First Data and Western Union, respectively, to take or cause to be taken all such further action, to execute and deliver or cause to be executed and delivered all such further agreements, certificates, instruments and documents, to make or cause to be made all such filings with
 
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governmental or regulatory authorities, and to pay or cause to be paid all such fees and expenses, in each case which shall in such officers’ judgment be deemed necessary, proper or advisable to effect and carry out the intent of this Agreement, such determination to be evidenced conclusively by such officers’ execution and delivery thereof or taking of action in respect thereto.
 
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IN WITNESS WHEREOF , the parties have caused this agreement to be executed in their names by a duly authorized officer as of the date first written above.

FIRST DATA CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
	
THE WESTERN UNION COMPANY	
		
By:	 	 	
Name:	 		
Title:	 		
 
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Exhibit 10.3
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT is made as of [•], 2006 by and between First Data Corporation, a Delaware corporation ( “ First Data ” ), and The Western Union Company, a Delaware corporation ( “ Western Union ” ).
WHEREAS, First Data, through certain of its Subsidiaries, is, among other things, engaged in the business of providing money transfer, consumer to biller payment services, retail money orders and certain prepaid services (the “ Western Union Business ” );
WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to transfer to Western Union those Subsidiaries of First Data that are engaged in the Western Union Business and certain other assets related thereto;
WHEREAS, First Data has agreed to transfer, or cause to be transferred, to Western Union such Subsidiaries;
WHEREAS, the Board of Directors of First Data has determined that it would be advisable and in the best interests of First Data and its stockholders for First Data to distribute on a pro rata basis to the holders of First Data’s common stock, $0.01 par value, without any consideration being paid by the holders of such common stock, all of the outstanding shares of Western Union common stock, $0.01 par value, then owned by First Data;
WHEREAS, First Data and Western Union have entered into a Separation and Distribution dated as of the date hereof (the “ Distribution Agreement ” ) in order to carry out, effect and consummate the foregoing transactions; and
WHEREAS, to facilitate the transactions described above, First Data and Western Union deem it to be appropriate and in the best interests of First Data and Western Union that First Data provide certain Services to Western Union and Western Union provide certain Services to First Data, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Distribution Agreement. As used in this Agreement:
(a) “ Action ” means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any Governmental Authority.

(b) “ Additional Services ” means the Additional First Data Services or the Additional Western Union Services, individually, or the Additional First Data Services and the Additional Western Union Services, collectively, as the context may indicate. Any Additional Services provided pursuant to this Agreement shall be deemed to be “ Services ” under this Agreement.
(c) “ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person. After the Distribution, Western Union and First Data shall not be deemed to be under common Control for purposes hereof due solely to the fact that Western Union and First Data have common stockholders.
(d) “ Agreement ” means this Transition Services Agreement together with those portions of the Distribution Agreement referenced herein and all Annexes attached hereto and incorporated herein by this reference and all amendments, modifications and changes hereto and thereto.
(e) “ Authorized Representative ” means any of the individuals listed on Annex A .
(f) “ Consent ” means a Governmental Consent or a Third Party Consent.
(g) “ Control ” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.
(h) “ Distributed Companies ” means FDCS Holdings, CESI Holdings, TeleCheck EBP RE, Ltd., IPS Holdings, Inc., Virtual Financial Services, LLC, First Data Canada Limited and their respective Subsidiaries (including those formed or acquired after the date hereof).
(i) “ Expenses ” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).
(j) “ Fees ” for a particular Service shall be as set forth on Annex B or Annex C , as the case may be.
(k) “ First Data Indemnified Parties ” means the First Data Parties (for so long as such Person is a First Data Party) and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing.
(l) “ First Data Parties ” means First Data and its Subsidiaries (including those formed or acquired after the date hereof), other than the Western Union Parties.
(m) “ First Data Services ” means the Services generally described on Annex B and any other Service provided by First Data or its Affiliates pursuant to this Agreement.
 
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(n) “ First Data Systems ” means any computer software program or routine or part thereof owned, licensed or provided by or for any First Data Party which is used by any Western Union Party or its suppliers on any First Data Party’s behalf pursuant to this Agreement, and any other computer software program or routine so designated in Annex B or Annex C, each as modified, maintained or enhanced from time to time by any First Data Party, any Western Union Party or any Third Party.
(o) “ Governmental Authority ” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.
(p) “ Governmental Consents ” means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.
(q) “ Losses ” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges.
(r) “ Party ” means a First Data Party or a Western Union Party, as applicable.
(s) “ Person ” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Authority.
(t) “ Services ” means the First Data Services or the Western Union Services, individually, or the First Data Services and the Western Union Services, collectively, as the context may indicate. “ Services ” shall also include those First Data and Western Union functions described in Sections 7.2(a) through 7.2(f) .
(u) “ Subsidiary ” means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or Controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that Person. After the Distribution, First Data and Western Union shall not be deemed to be under common Control for purposes hereof due solely to the fact that First Data and Western Union have common stockholders.
(v) “ Systems ” means the First Data Systems or the Western Union Systems, individually, or the First Data Systems and the Western Union Systems, collectively, as the context may indicate.
(w) “ Third Party ” means a Person that is not an Affiliate of any Party hereto.
 
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(x) “ Third Party Consents ” means any material consent, approval or authorization to be obtained from any Third Party that is not a Governmental Authority.
(y) “ Western Union Indemnified Parties ” means the Western Union Parties (for so long as such Person is a Western Union Party) and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing.
(z) “ Western Union Parties ” means Western Union, the Western Union Subsidiaries and any other Subsidiary of Western Union (including those formed or acquired after the date hereof), in each case, other than the Distributed Companies.
(aa) “ Western Union Services ” means the Services generally described on Annex C and any other Service provided by Western Union or its Affiliates pursuant to this Agreement.
(bb) “ Western Union Subsidiaries ” means, collectively, ECG, FFMC, GMT, Paymap, WUSI and each Subsidiary of any of the foregoing other than the Distributed Companies.
(cc) “ Western Union Systems ” means any computer software program or routine or part thereof owned, licensed or provided by or for any Western Union Party which is used by any First Data Party or its suppliers on any Western Union Party’s behalf pursuant to this Agreement, and any other computer software program or routine so designated on Annex B or Annex C, each as modified, maintained or enhanced from time to time by any Western Union Party, any First Data Party or any Third Party.
Section 1.2 Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:
(i) words used in the singular include the plural and words used in the plural include the singular;
(ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;
(iii) references to any gender includes the other gender;
(iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;
(v) references to any Article, Section or Annex means such Article or Section of, or such Annex to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
 
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(vii) references to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
(viii) references to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;
(x) accounting terms used herein shall have the meanings historically ascribed to them by First Data and its Subsidiaries, including Western Union, in its and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement;
(xi) if there is any conflict between the provisions of the Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof; if there is any conflict between the provisions of the body of this Agreement and the Annexes hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Annex;
(xii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;
(xiii) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Affiliates to take such action or refrain from taking such action, as the case may be (and, accordingly, if Services are provided by Affiliates of First Data, references to “First Data” shall be deemed to be references to such Affiliate which shall provide the Services under this Agreement; if Services are provided by Affiliates of Western Union, references to “Western Union” shall be deemed to be references to such Affiliate which shall provide the Services under this Agreement); and
(xiv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.
ARTICLE II
TERM
Section 2.1 Term . The term of this Agreement shall commence on the Distribution Date and end on the first anniversary of the Distribution Date (the “ Term ” ).
 
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ARTICLE III
PERFORMANCE OF SERVICES
Section 3.1 General . (a) During the Term, and subject to the terms and conditions of this Agreement, First Data will provide, or will cause to be provided, the First Data Services to Western Union and its Affiliates. Unless specifically provided to the contrary on Annex B (including any performance standards set forth therein) or Annex D , all First Data Services provided pursuant to this Agreement shall be performed or provided, as applicable: (i) with the use of reasonable care; (ii) consistent with this Agreement and in substantially the same manner (including as to level, quality and timeliness) as such Services have been provided to the Western Union Business by the First Data Parties on or prior to the Distribution Date; (iii) in material compliance with applicable laws, rules and regulations; (iv) in a manner substantially consistent with the First Data Parties’ usual and customary practices with respect to the Western Union Business on or prior to the Distribution Date; and (v) with substantially the same priority under comparable circumstances as it provides such services to itself and its Subsidiaries.
(b) During the Term, and subject to the terms and conditions of this Agreement, Western Union will provide, or will cause to be provided, the Western Union Services to First Data and its Affiliates. Unless specifically provided to the contrary on Annex C (including any performance standards set forth therein) or Annex D , all Western Union Services provided pursuant to this Agreement shall be performed or provided, as applicable: (i) with the use of reasonable care; (ii) consistent with this Agreement and in substantially the same manner (including as to level, quality and timeliness) as such Services have been provided to the First Data Business by the Western Union Parties on or prior to the Distribution Date; (iii) in material compliance with applicable laws, rules and regulations; (iv) in a manner substantially consistent with the Western Union Parties’ usual and customary practices with respect to the First Data Business on or prior to the Distribution Date; and (v) with substantially the same priority under comparable circumstances as it provides such services to itself and its Subsidiaries.
Section 3.2 Additional Services . (a) If Western Union reasonably determines that additional transition services of the type previously provided by the First Data Parties to the Western Union Business are necessary to conduct the Western Union Business and Western Union or its Affiliates are not able to provide such services to the Western Union Business (each such service an “ Additional First Data Service ” ), then Western Union may provide written notice thereof to First Data. Upon receipt of such notice by First Data, if First Data is willing, in its sole discretion, to provide such Additional First Data Service during the Term, the Parties will negotiate in good faith an amendment to Annex B setting forth the Additional First Data Service, the terms and conditions for the provision of such Additional First Data Service and the Fees payable by Western Union for such Additional First Data Service, such Fees to be determined on an arm’s-length basis.
(b) If First Data reasonably determines that additional transition Services of the type previously provided by the Western Union Parties to the First Data Business are necessary to conduct the First Data Business and First Data or its Affiliates are not able to provide such services to the First Data Business (each such service an “ Additional Western Union Service ” ), then First Data may provide written notice thereof to Western Union. Upon receipt of such notice by Western Union, if Western Union is willing, in its sole discretion, to provide such Additional Western Union Service during the Term, the Parties will negotiate in good faith an amendment to Annex C setting forth the Additional Western Union Service, the terms and conditions for the provision of such Additional Western Union Service and the Fees payable by First Data for such Additional Western Union Service, such Fees to be determined on an arm’s-length basis.
 
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Section 3.3 Procedure . (a) Any requests by a Party to the other Party regarding (i) the Services or (ii) any modification or alteration to the provision of the Services must be made by an Authorized Representative (it being understood that the receiving Party shall not be obligated to agree to any modification or alteration requested thereby). A Party receiving Services shall provide no less than 30 days written notice (unless a shorter time is mutually agreed upon by the Parties) to the other Party of any Services that, prior to the expiration of the Term, are no longer needed from the other Party, in which case this Agreement shall terminate as to such Services, provided that the Party providing such Services must consent to such early termination, such consent not to be unreasonably withheld, conditioned or delayed (a “ Partial Termination ” ). The parties shall mutually agree as to the effective date of any Partial Termination. In the event of any termination prior to the expiration of the Term or of any Partial Termination hereunder, (x) with respect to any terminated Services in which the Fee for such terminated Services is charged as a flat monthly rate, the Fee for the month in which the termination occurs shall be 0% of the monthly rate for such terminated Service, in the event that the effective date of termination occurs on or prior to the 10 th calendar day of such month, or 100% of the monthly rate for such Service, in the event that the effective date of termination occurs on or after the 11 th calendar day of such month, and (y) with respect to any other terminated Services, all amounts due pursuant to the terms hereof with respect to the terminated Services shall be appropriately pro rated and reduced to reflect such shortened period during which such Services are actually provided hereunder, and each Party shall refund to the other Party an appropriate pro rated amount for any such Services that have been paid for in advance. Notwithstanding the preceding sentence, to the extent any amounts due or advances made hereunder related to costs or expenses that have been or will be incurred and that cannot be recovered by a Party providing Services, such amounts due or advances made shall not be pro rated or reduced and such Party shall not be required to refund to the other Party any pro rated amount for such costs or expenses; and the terminating Party shall reimburse the Party providing such Service for any Third Party cancellation or similar charges incurred as a result of such early termination. Notwithstanding anything to the contrary hereunder, each Party may avail itself of the remedies set forth in Sections 3.4(b) and 10.2 without fulfilling the notice requirements of this Section 3.3(a) .
(b) In the event of a Partial Termination, this Agreement shall remain in full force and effect with respect to the Services which have not been terminated by the Parties as provided herein.
(c) Each Party acknowledges and agrees that certain of the Services to be provided under this Agreement have been, and will continue to be provided (in accordance with this Agreement) to the First Data Business or the Western Union Business, as applicable, by Third Parties designated by the Party responsible for providing such Services. To the extent so provided, the Party responsible for providing such Services shall use commercially reasonable efforts to (a) cause such Third Parties to provide such Services under this Agreement and/or (b) enable the Party seeking the benefit of such Services and its Affiliates to avail itself of such Services; provided , however , that if any such Third Party is unable or unwilling to provide any such Services, the Parties agree to use their commercially reasonable efforts to determine the manner in which such Services can best be provided (it being acknowledged and agreed that any costs or
 
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expenses to be incurred in connection with obtaining a Third Party to provide any such Services shall be paid by the Party to which such Services are provided; provided that the Party responsible for providing such Services shall use commercially reasonable efforts to communicate the costs or expenses expected to be incurred in advance of incurring such costs or expenses).
Section 3.4 Disclaimer of Warranties; Force Majure .
(a) Except as expressly set forth in this Agreement: (i) each Party acknowledges and agrees that the other Party makes no warranties with respect to the Services to be provided hereunder; and (ii) each Party hereby expressly disclaims all warranties, expressed or implied, of any kind with respect to the Services to be provided hereunder, including, without limitation, any warranty of merchantability or fitness for a particular purpose as to the Services provided hereunder. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS AGREEMENT ARE PROVIDED AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT WARRANTY OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER.
(b) If either Party, any of its Affiliates or any Third Party service provider is prevented from or delayed in complying, either totally or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or components, any law, order, proclamation, regulation, ordinance, demand, seizure or requirement of any Governmental Authority, riot, civil commotion, war, rebellion, acts of terrorism, nuclear accident or other acts of God, or acts, omissions or delays in acting by any governmental or military authority or the other Party or other causes beyond the reasonable control and without the fault or negligence of such Party, then upon notice to the other Party, the affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and, unless otherwise set forth herein to the contrary, the affected Party shall have no liability to the other Party, its Affiliates or any other Person in connection therewith. Each Party shall use commercially reasonable efforts to promptly remove such disability as soon as possible, but in any event no later than 30 days after giving notice of such disability; provided , however , that nothing in this Section 3.4(b) will be construed to require the settlement of any strike, walkout, lockout or other labor dispute on terms which, in the reasonable judgment of the affected Party, are contrary to its interest. It is understood that the settlement of a strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected Party. If a Party is unable to provide any of the Services due to such a disability, each Party shall use commercially reasonable efforts to cooperatively seek a solution that is mutually satisfactory. In addition, upon becoming aware of a disability causing a delay in performance or preventing performance of any obligations of a Party under this Agreement, the otherwise defaulting Party shall promptly notify the other Party in writing of the existence of such disability and the anticipated duration of the disability. The Party entitled to the benefit of the Services shall have the right, but not the obligation, to engage subcontractors to perform such obligations for the duration of the period during which such disability delays or prevents the performance of such obligation by the affected Party, it being agreed that the Fees paid or
 
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payable under this Agreement with respect to the Service affected by the disability shall be reduced (or refunded, if applicable) on a dollar for dollar basis for all amounts paid by the affected Party to such subcontractors, provided that the affected Party shall not be responsible for the amount of excess fees charged by the subcontractor to perform such Services to the extent they exceed the Fees for the applicable period of disability. Notwithstanding anything to the contrary hereunder, each Party shall make the mitigation and resolution of any disability affecting its ability to perform hereunder a high priority and shall use efforts of a type, intensity and duration which, taking into account the type of Services and the significance of such Services to the other Party’s business, represent a good and professional response to such disability, but in any event no less than commercially reasonable efforts. In addition, and notwithstanding anything hereunder to the contrary, the Parties agree that this Section 3.4(d) shall not be construed so as to excuse a Party of its obligations to perform in accordance with Article VII and Article VIII at all times during the Term.
Section 3.5 Transition of Responsibilities . Each Party agrees to use commercially reasonable efforts to reduce or eliminate its and its Affiliates’ dependency on each Service as soon as is reasonably practicable. Each Party agrees to cooperate with the other Party to facilitate the smooth transition of the Services being provided to such Party by the other Party.
ARTICLE IV
COOPERATION
Section 4.1 Cooperation . Each Party shall, and shall cause its Affiliates to, use good faith efforts to cooperate with the other Party in all matters relating to the provision and receipt of the Services, including providing information and documentation sufficient for the other Party to provide the Services and making available, as reasonably requested by the other Party, timely decisions, approvals and acceptances in order that the other Party and its Affiliates may perform their respective obligations under this Agreement in a timely manner.
Section 4.2 Consents . (a) Each Party shall, and shall cause its Affiliates to, cooperate to obtain all Consents for any Third Party software or other Third Party intellectual property related to the provision of the Services sufficient to enable the Parties to perform the Services in accordance with this Agreement; provided , however , that neither Party shall be obligated under this Agreement to pay any consideration, grant any concession or incur any Liability to any third Person to obtain any such Consent. Lists that identify all Third Party software or other Third Party intellectual property the Parties reasonably believe will be used to provide the Services (other than Additional Services), whether any Consent is believed to be required and whether such Consent has been obtained as of the date hereof are set forth on Annex D .
(b) In the event that any Consent is not obtained, then, unless and until such Consent is obtained, the Parties shall cooperate with each other in achieving a reasonable alternative arrangement for the Party entitled to the benefit of the Services to continue to process its work and for the Party providing the Services to perform such Services.
Section 4.3 Informal Dispute Resolution . The Authorized Representatives of First Data and Western Union (each of whom shall have the authority to legally bind the Party it represents) shall meet as often as shall reasonably be requested by either Party to review the
 
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performance of the other Party under this Agreement. Written minutes of such meetings may be kept. In the event of any dispute or disagreement between the Parties either with respect to the interpretation of any provision of this Agreement, or with respect to the performance by First Data or Western Union hereunder, then upon the written request of First Data or Western Union each Party shall appoint within 14 calendar days a designated officer whose task it shall be to meet for the purpose of endeavoring to resolve such dispute or to negotiate for an adjustment to such provision of the Agreement. The Parties shall use commercially reasonable efforts to cause their respective designated officers to meet within 15 days following identification of the designated officers. The designated officers shall meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all information with respect to the matter in issue which the Parties believe to be appropriate and germane in connection with its resolution. Such officers shall discuss the problem and/or negotiate in good faith in an effort to resolve the dispute or renegotiate the applicable provision without the necessity of any formal proceeding relating thereto. During the course of such negotiation, subject to the Parties’ respective confidentiality obligations, all reasonable requests made by either Party to the other for information shall be honored in order that each of the Parties may be fully advised in the matter. The specific format for such discussions shall be left to the discretion of the designated officers but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party. Except for claims arising under Articles VII or VIII , the Parties agree to follow the dispute resolution process set forth in this Section 4.3 prior to the commencement of any Action under Section 12.14 .
ARTICLE V
FEES
Section 5.1 Fees . Each Party shall pay the other Party the Fees for the Services provided by such other Party under this Agreement. The Fees for the First Data Services are set forth on Annex B and the Fees for the Western Union Services are set forth on Annex C .
Section 5.2 Taxes . To the extent required or permitted by applicable law, there shall be added to any Fees due under this Agreement, and each Party agrees to pay to the other, amounts equal to any taxes, however designated or levied, based upon such Fees, or upon this Agreement or the Systems, Services or materials provided under the Agreement, or their use, including state and local privilege or excise taxes based on gross revenue and any taxes or amounts in lieu thereof paid or payable by the Party providing Services hereunder. In the event taxes are not added to an invoice from the Party providing Services hereunder, the Party purchasing such Services is responsible to remit to the appropriate tax jurisdiction any additional amounts due including tax, interest and penalty. If additional amounts are determined to be due on the Services provided hereunder as a result of an audit by a tax jurisdiction, the Party purchasing the Services hereunder agrees to reimburse the Party providing the Services for the additional amounts due including tax, interest and penalty. The Party providing Services hereunder will be responsible for penalty or interest associated with its failure to remit invoiced taxes. The Parties further agree that no Party to this Agreement shall be required to pay any franchise taxes, taxes based on the net income of the other Party or personal property taxes on property owned or leased by a Party and used by such Party to provide Services.
 
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ARTICLE VI
INVOICE AND PAYMENT; AUDIT
Section 6.1 Invoices and Payment . Within 20 days following the end of each month during the Term (or within 20 days after receipt of a Third Party supplier’s invoice in the case of Services that are provided by a Third Party supplier), each Party will submit to the other Party for payment a written statement of amounts due under this Agreement for such month. For Services set forth on Annex B or Annex C , the statement will set forth the Fees, in the aggregate and itemized, set forth on Annex B or Annex C as the case may be. Each statement will specify the nature of any amounts due for any Fees as set forth on Annex B or Annex C and will contain reasonably satisfactory documentation in support of such amounts as specified therein and such other supporting detail as the other Party may reasonably require to validate such amounts due.
Section 6.2 Timing of Payment; No Offsets . Each Party will pay all undisputed amounts due pursuant to this Agreement within 30 days after the date upon which each such statement that is required to be provided hereunder is received by such Party. Neither Party shall offset any amounts owing to it by the other Party or any of its Affiliates against amounts payable by such Party hereunder or any other agreement or arrangement.
Section 6.3 Non-Payment . If either Party fails to pay the full amount of any invoice within 45 days after its receipt of the invoice, such failure shall be considered a material breach of this Agreement (except to the extent any invoiced amounts are reasonably disputed by the non-paying Party in good faith and of which dispute the non-paying Party has notified the other Party in accordance with the requirements of this Agreement). The remedies provided to each Party by this Section 6.3 and by Section 10.2 shall be without limitation of any other applicable provisions of this Agreement.
Section 6.4 Late Payments . Payments made after the date they are due shall bear interest at a rate per annum equal to the Prime Rate plus 2.0%.
Section 6.5 Audit Rights . (a) Each Party may audit (or cause an independent Third Party auditor to audit) the books, records and facilities of the other Party to the extent necessary to determine the other Party’s compliance with this Agreement with respect to Fees paid or payable pursuant to this Article VI , or the performance of its other obligations set forth in this Agreement. For any given Service, each Party shall have the right to audit the books, records and facilities of the other Party pertaining to such Service once for each twelve month period during which payment obligations are due (and at such other times as may be required by applicable law). Each Party shall also have the right to audit (or cause an independent Third Party auditor to audit) the books, records and facilities of the other Party pertaining to a particular Service within six months after the termination of such Service.
(b) Any audit shall be conducted during regular business hours and in a manner that complies with the building and security requirements of the Party being audited. Such audits shall not interfere unreasonably with the operations of the Party being audited. The Party desiring to conduct an audit shall provide notice to the Party to be audited not less than 30 days prior to the commencement of the audit and shall specify the date on which the audit will commence. The Party conducting an audit shall pay the costs of conducting such audit, unless
 
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the results of an audit reasonably indicate an overpayment by the Party conducting the audit of 10% or more (such percentage to be determined by reference to the Services which are subject to the specific audit), in which case the Party being audited shall pay the reasonable out-of-pocket costs of the Party conducting such audit. If the audit reasonably concludes that an overpayment or underpayment has occurred during the audited period, such payment shall be remitted by the Party responsible for such payment to the other Party within 30 days after notice to the Party responsible for such payment.
ARTICLE VII
INDEPENDENCE; OWNERSHIP OF ASSETS
Section 7.1 Independence . All employees and representatives of a Party and any of its Affiliates will be deemed for purposes of all compensation and employee benefits to be employees or representatives of such Party or its Affiliates (or their subcontractors) and not employees or representatives of the other Party or any of its Affiliates. In providing the Services, such employees and representatives will be under the direction, control and supervision of the Party or its Affiliates (or their subcontractors) providing such Services, and not of the Party receiving such Services. The Party or its Affiliates (or their subcontractors) providing the Services will have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such employees and representatives.
Section 7.2 Ownership of Assets . (a)  First Data Systems . First Data Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the First Data Parties and their suppliers. From and after the creation of any and all such First Data Systems or enhancements thereof or improvements thereto by Western Union or by any contractor, Affiliate or other Third Party on Western Union’s behalf, in each case, pursuant to this Agreement, Western Union agrees to assign and hereby assigns to First Data or the applicable First Data Party, any and all right, title and interest that Western Union or such contractor, Affiliate or Third Party may have in such First Data Systems or enhancements thereof or improvements thereto.
(b) Western Union Systems . Western Union Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the Western Union Parties and their suppliers. From and after the creation of any and all such Western Union Systems or enhancements thereof or improvements thereto by First Data or by any contractor, Affiliate or Third Party on First Data’s behalf, in each case, pursuant to this Agreement, First Data agrees to assign and hereby assigns to Western Union or the applicable Western Union Party, any and all right, title and interest that First Data or such contractor, Affiliate or Third Party may have in such Western Union Systems or enhancements thereof or improvements thereto.
(c) License . During the Term, each Party grants to the other and its respective suppliers a non-exclusive, royalty-free right and license to use the First Data Systems or the Western Union Systems, as applicable, solely to provide the Services contemplated hereunder. Notwithstanding anything to the contrary hereunder, each Party agrees to cooperate with the other (and shall cause its suppliers to so cooperate) to cause the orderly return of the other Party’s Systems and property upon the expiration of the Term or upon written request, whichever is earlier.
 
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(d) Maintenance . With respect to any Systems that a First Data Party or a Western Union Party, as applicable, is required to maintain or enhance hereunder, such First Data Party or Western Union Party shall maintain the existing documentation and make any revisions to such documentation resulting from such enhancements. All right, title and interest in and to such enhancements and such documentation, whether created by the Party that provides the Service or any contractor, Affiliate or supplier on such Party’s behalf, shall be owned exclusively by and vested exclusively in the Party which owns the applicable System.
(e) Data Ownership . As between any First Data Party, on the one hand, and any Western Union Party, on the other hand, all right, title and interest in and to all data processed hereunder shall be owned exclusively by the First Data Party or Western Union Party that originally supplied it to the other. First Data and Western Union hereby assign to the other, and shall cause any of its or their contractors, Affiliates or suppliers to assign to the other, as applicable, all right, title and interest that First Data or Western Union, as applicable, may have in the other’s data.
(f) Third Party Suppliers . Each Party shall have written agreements with its employees consistent with past practices, and shall cause any contractor, Affiliate or Third Party performing Services on its behalf pursuant to this Agreement to also have written agreements with its employees that are consistent with its obligations hereunder, including the obligations to disclose and assign all right, title and interest in intellectual property rights as contemplated in this Section 7.2 and Article VIII . Each Party agrees not to voluntarily terminate or to amend or modify such agreements with respect to the provisions described above without providing at least 30 days prior written notice thereof and further agrees that any such amendments or modifications to such agreements shall be prospective only.
Section 7.3 Other Assets . Except as otherwise noted in Sections 7.1 and 7.2 , all procedures, methods, systems, strategies, tools, equipment, facilities and other resources used by a Party, any of its Affiliates or any Third Party service provider in connection with the provision of the Services hereunder shall remain the property of such Party, its Affiliates or such service providers and, except as otherwise provided herein, shall at all times be under the sole direction and control of such Party, its Affiliates or such Third Party service provider.
ARTICLE VIII
CONFIDENTIALITY
Section 8.1 Confidentiality . Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of the confidentiality provisions set forth in Section 14.8 of the Distribution Agreement.
ARTICLE IX
NO AGENCY RELATIONSHIP
Section 9.1 No Agency Relationship . Nothing in this Agreement shall be deemed to make either Party or its Affiliates the agent of the other Party or its Affiliates.
 
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ARTICLE X
TERMINATION
Section 10.1 General . This Agreement shall terminate, and the obligation of each Party to provide all Services shall cease, on the earliest to occur of (i) the date on which the provision of all Services has been terminated by the Parties pursuant to Section 3.3 , subject to the terms of Section 3.3 , or (ii) the date on which the Term of this Agreement has ended pursuant to Section 2.1 or 10.2 .
Section 10.2 Termination of Entire Agreement . A Party shall have the right to terminate this Agreement or effect a partial termination effective upon delivery of written notice to the other Party if the other Party: (a) makes an assignment for the benefit of creditors, or becomes bankrupt or insolvent, or is petitioned into bankruptcy, or takes advantage of any state, federal or foreign bankruptcy or insolvency act, or if a receiver or receiver/manager is appointed for all or any substantial part of its property and business and such receiver or receiver/manager remains undischarged for a period of 30 days; or (b) materially defaults in the performance of any of its covenants or obligations contained in this Agreement (or, in the case of a partial termination, with respect to the Services being terminated) and such default is not remedied to the nondefaulting Party’s reasonable satisfaction within 45 days after receipt of written notice by the defaulting Party informing such Party of such default, or if such default is not capable of being cured within 45 days, if the defaulting Party has not promptly begun to cure the default within such 45 day period and thereafter proceeded with all diligence to cure the same.
Section 10.3 Procedures on Termination . Following any termination of this Agreement in whole or in part, each Party will cooperate with the other Party as reasonably necessary to avoid disruption of the ordinary course of the other Party’s and its Affiliates’ business. Termination shall not affect any right to payment for Services provided prior to termination.
Section 10.4 Effect of Termination . Sections 3.4(c) , 4.3 , Article V (with respect to Fees and Taxes attributable to periods prior to termination), 6.1 , 6.2 , 6.4 , 6.5 , 10.3 , this Section 10.4 and Articles I , VII , VIII , XI and XII shall survive any termination of this Agreement. For the avoidance of doubt, neither (a) termination of a particular Service hereunder nor (b) termination of this Agreement with respect to the Services provided under one Annex, but not the other Annex, shall be a termination of this Agreement.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Indemnification by Western Union . Western Union shall indemnify, defend and hold harmless the First Data Indemnified Parties for any Losses and Expenses incurred by them in connection with or arising out of any (i) material breach of this Agreement by Western Union, its Affiliates, employees, suppliers or contractors, (ii) Western Union’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith in the provision of the Western Union Services by Western Union, its Affiliates, employees, suppliers or contractors pursuant to this Agreement, (iii) any Action that determines that the provision by any Western Union Party and/or the receipt by the First Data Indemnified Parties of any Western
 
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Union Services infringes upon or misappropriates the intellectual property of any Third Party, to the extent that any such Losses and Expenses are determined to have resulted from Western Union’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith, and (iv) Third Party claims arising out of the provision of the First Data Services, except to the extent that such third Person claims for Losses and Expenses are finally determined by a final non-appealable decision of a court having jurisdiction over Western Union and First Data or pursuant to Article XIII of the Distribution Agreement to have arisen out of the material breach of this Agreement, gross negligence, bad faith or willful misconduct of First Data, its Affiliates, employees, suppliers or contractors in providing the First Data Services.
Section 11.2 Indemnification by First Data . First Data shall indemnify, defend and hold harmless the Western Union Indemnified Parties for any Losses and Expenses incurred by them in connection with or arising out of (i) any material breach of this Agreement by First Data, its Affiliates, employees, suppliers or contractors, (ii) First Data’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith in the provision of the First Data Services by First Data, its Affiliates, employees, suppliers or contractors pursuant to this Agreement, (iii) any Action that determines that the provision by any First Data Party and/or the receipt by the Western Union Indemnified Parties of any First Data Services infringes upon or misappropriates the intellectual property of any Third Party to the extent that any such Losses and Expenses are determined to have resulted from First Data’s, its Affiliates’, employees’, suppliers’ or contractors’ gross negligence, willful misconduct or bad faith, and (iv) Third Party claims arising out of the provision of the Western Union Services, except to the extent that such Losses and Expenses are finally determined by a final non-appealable decision of a court having jurisdiction over First Data and Western Union or pursuant to Article XIII of the Distribution Agreement to have arisen out of the material breach of this Agreement, gross negligence, bad faith or willful misconduct of Western Union, its Affiliates, employees, suppliers or contractors in providing the Western Union Services.
Section 11.3 Limitations and Liability . Each Party shall have a duty to mitigate the Losses and Expenses for which the other is responsible hereunder. Except for Losses or Expenses arising out of or related to the gross negligence or willful misconduct of the defaulting Party or in respect of Article VIII , in no event shall a Party’s (including its Affiliates’, employees’, contractors’ or suppliers’) cumulative aggregate liability arising under or in connection with this Agreement (or the provision of Services hereunder) exceed the greater of $10,000,000 and the amount of payments received by such Party from the other Party pursuant to this Agreement. EXCEPT FOR CLAIMS ARISING OUT OF OR RELATING TO ARTICLE VIII, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS OF REVENUES OR PROFITS), EXEMPLARY OR PUNITIVE DAMAGES OR THE LIKE ARISING UNDER ANY LEGAL OR EQUITABLE THEORY OR ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT (OR THE PROVISION OF SERVICES HEREUNDER), ALL OF WHICH ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER OR NOT ANY PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
 
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Section 11.4 Indemnification Is Exclusive Remedy . Except for equitable relief and rights pursuant to Section 6.3 or Article X , the indemnification provisions of this Article XI shall be the exclusive remedy for breach of this Agreement.
Section 11.5 Risk Allocation . Each Party agrees that the Fees charged under this Agreement reflect the allocation of risk between the Parties, including the disclaimer of warranties in Section 3.4(a) and the limitations on liability in Section 11.3 . Modifying the allocation of risk from what is stated here would affect the Fees that each Party charges, and in consideration of those Fees, each Party agrees to the stated allocation of risk.
Section 11.6 Indemnification Procedures . All claims for indemnification pursuant to this Article XI shall be made in accordance with the provisions set forth in Sections 12.6 and 12.7 of the Distribution Agreement. Notwithstanding anything to the contrary hereunder, no cause of action, dispute or claim for indemnification may be asserted against either Party or submitted to arbitration or legal proceedings which accrued more than two years after the later of (a) the occurrence of the act or event giving rise to the underlying cause of action, dispute or claim and (b) the date on which such act or event was, or should have been, in the exercise of reasonable due diligence, discovered by the Party asserting the cause of action, dispute or claim.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Entire Agreement . This Agreement, including the Annexes hereto and the sections of the Distribution Agreement referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.
Section 12.2 Choice of Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware.
Section 12.3 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of First Data and Western Union.
Section 12.4 Waiver . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
Section 12.5 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any
 
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one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
Section 12.6 Execution in Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the Parties.
Section 12.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
Section 12.8 Third Party Beneficiaries . Except to the extent otherwise provided in Article XI , the provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.
Section 12.9 Notices . All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when delivered or mailed in accordance with the terms of Section 15.9 of the Distribution Agreement.
Section 12.10 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Affiliate of such Party.
Section 12.11 No Public Announcement . Neither First Data nor Western Union shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that either Party shall be so obligated by law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with applicable law, accounting and SEC disclosure obligations or the rules of any stock exchange.
Section 12.12 Limited Liability . Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of Western Union or First Data, in its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of such Party under this Agreement and, to
 
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the fullest extent legally permissible, each of Western Union and First Data, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law.
Section 12.13 Mutual Drafting . This Agreement shall be deemed to be the joint work product of First Data and Western Union and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.
Section 12.14 Dispute Resolution . The Parties agree that any dispute, controversy or claim between them with respect to the matters covered hereby shall be governed by and resolved in accordance with the procedures set forth in Section 4.3 hereof and in Article XIII of the Distribution Agreement.
 
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IN WITNESS WHEREOF , the Parties have caused this Agreement to be signed by their authorized representatives as of the date first above written.

FIRST DATA CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
	
THE WESTERN UNION COMPANY	
		
By:	 	 	
Name:	 		
Title:	 		
Signature Page to Transition Services Agreement

Annex A
AUTHORIZED REPRESENTATIVES
[Intentionally omitted]
 
A-1

Annex B
FIRST DATA SERVICES AND FEES
[Intentionally omitted]
 
B-1

Annex C
WESTERN UNION SERVICES AND FEES
[Intentionally omitted]
 
C-1

Annex D
THIRD PARTY SOFTWARE
[Intentionally omitted]
 
D-1
 
Exhibit 10.4
 
PATENT OWNERSHIP AGREEMENT AND COVENANT NOT TO SUE
 
This Agreement is entered into and made effective as of the ______ day of _______, 2006, by and between First Data Corporation, a Delaware corporation, having a principal place of business at 6200 S. Quebec Street, Greenwood Village, CO 80111 (hereinafter “First Data”) and The Western Union Company, a Delaware corporation having a principal place of business at 12500 E. Belford Ave., Englewood, CO 80112 (hereinafter “Western Union”).
 
1.0 BACKGROUND
 
The parties have entered into the Separation Agreement concurrently herewith, under which they have agreed to their separation into two separately traded public companies (the “Separation”). The parties desire to provide for ownership and other rights to patents that have previously been owned by the parent company prior to the Separation. Accordingly, the parties agree as follows:
 
2.0 DEFINITIONS
 
The following capitalized terms, whether in singular of plural form, shall have the meanings set forth below for all purposes of this Agreement:
 
“ Affiliate ” shall mean, when used with reference to a specific Person, any Person that, directly or indirectly, or through one or more intermediaries, owns or controls, is owned or controlled by, or is under common ownership or common control with, such specific Person. As used herein, “control” means the power to direct the management or affairs of a Person and “ownership” means the beneficial ownership of more than 50% of the voting equity securities of the Person. 
 
“ Business Unit ” shall mean assets, liabilities and employees of a party that while not necessarily organized as a separate corporation or other legal entity is regarded by the party as a distinct unit for purposes of profit and loss management, or which is designated for the specific purpose of disposition as an operating entity by a party.
 
“ Control ” shall mean the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlled by” and “under common Control” have meanings correlative to the foregoing.
 
“ First Data Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit A attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit A, and (c) divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.
 
“ First Data Controlled Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit B attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit B, and (c) divisions, continuations, continuations-in-part (but

only to the extent claims are supported by the specifications of those patents), re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.
 
“ Separation Agreement ” shall mean the Separation and Distribution Agreement dated ______________, 2006 between the parties.
 
“ Subsidiary ” shall mean (a) a corporation or other legal entity Controlled by a party or (b) a Business Unit. Any such corporation, other legal entity or Business Unit shall be deemed a Subsidiary of a party only so long as it is Controlled by that party.
 
“ Western Union Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit C attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit C, and (c) divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.
 
“ Western Union Controlled Patents ” shall mean (a) those U. S. patents (and any non-U.S. patents corresponding thereto) identified in Exhibit D attached hereto, (b) any U.S. or non-U.S. patents corresponding to and issuing from those patent applications and invention disclosures identified in Exhibit D, and (c) divisions, continuations, continuations-in-part (but only to the extent claims are supported by the specifications of those patents), re-examinations, reissues, extensions or renewals of any such U.S. or non-U.S. patents.
 
3.0 OWNERSHIP OF WESTERN UNION PATENTS AND FIRST DATA PATENTS
 
3.1 At the time of Separation, Western Union shall become the sole and exclusive owner of all right, title and interest in the Western Union Patents, including the right to sue for past infringement.
 
3.2 At the time of Separation, First Data shall continue as the sole and exclusive owner of all right, title and interest in the First Data Patents, including the right to sue for past infringement.
 
3.3 The parties agree to file appropriate assignment documents with the U. S. Patent and Trademark Office (and at appropriate non-U. S. patent offices for corresponding non-U. S. patents) and reasonably cooperate with each other in order to effect and record the ownership of the Western Union Patents and the First Data Patents as provided under this Section 3.0. The cost of such assignment documents and their filing shall be born by Western Union for the Western Union Patents, and shall be born by First Data for the First Data Patents.
 
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4.0 OWNERSHIP OF WESTERN UNION CONTROLLED PATENTS AND FIRST DATA CONTROLLED PATENTS
 
4.1 At the time of Separation, Western Union and First Data shall each have, as joint owners, an undivided interest in and to all right, title and interest in both the Western Union Controlled Patents and the First Data Controlled Patents.
 
4.2 The parties agree to file appropriate assignment documents with the U. S. Patent and Trademark Office (and at appropriate non-U. S. patent offices for corresponding non-U.S. patents) and reasonably cooperate with each other in order to effect and record the joint ownership of the Western Union Controlled Patents and the First Data Controlled Patents as provided under this Section 4.0. The cost of such assignment documents and their filing shall be born by Western Union for the Western Union Controlled Patents, and shall be born by First Data for the First Data Controlled Patents. It is understood that the parties may delay the recording of assignment documents in jurisdictions outside of the U.S. for cost, administrative convenience or other reasons, but any such delay in recording shall not operate as a waiver or otherwise affect the ownership of patents as provided herein. In the event of such delay and if a prompt recording should thereafter become necessary for carrying out any purpose of this Agreement, the parties agree to proceed with such recording in a reasonably expeditious manner.
 
4.3 Western Union and First Data shall each have, as joint owners, full right to practice the inventions claimed in the Western Union Controlled Patents and the First Data Controlled Patents. The scope of such rights shall be comparable to the scope of rights granted under Section 5.0 below (and subject to Sections 6.0 and 7.0 below).
 
4.4 Western Union shall have the right (in its sole discretion) to transfer its joint ownership interest in the Western Union Controlled Patents, but not the First Data Controlled Patents (subject to Paragraph 9.3). First Data shall have the right (in its sole discretion) to transfer its joint ownership interest in the First Data Controlled Patents, but not the Western Union Controlled Patents (subject to Paragraph 8.3).
 
4.5 Western Union hereby agrees to provide all commercially reasonable cooperation to First Data regarding notification of significant events in the process of prosecuting the Western Union Controlled Patents. First Data hereby agrees to provide all commercially reasonable cooperation to Western Union regarding notification of significant events in the process of prosecuting the First Data Controlled Patents. Such commercially reasonable cooperation includes but is not limited to, making inventors who are employed by a party available for review of amendments and signature of documents and providing copies of documents.
 
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5.0 IMMUNITY AS TO WESTERN UNION PATENTS AND FIRST DATA PATENTS
 
5.1 Western Union (on behalf of itself and its Subsidiaries) hereby grants to First Data and its Subsidiaries:
 
(a) an immunity from patent infringement claims, actions and suits based on any act which, if not licensed hereunder, would infringe, contributorily infringe or induce the infringement of any Western Union Patent, and
 
(b) pursuant to such immunity, a worldwide, royalty-free, non-exclusive license under the Western Union Patents to (i) make, have made (including authorizing others to provide to First Data for its own use), use (on behalf of First Data or for the benefit of its customers), have used, sell, offer to sell, lease, import and otherwise transfer any machine, system, process or product, or any component thereof, (ii) provide and have provided any service, (iii) provide and have provided any software to third parties, and (iv) practice and have practiced any process or method.
 
5.2 First Data (on behalf of itself and its Subsidiaries) hereby grants to Western Union and its Subsidiaries:
 
(a) an immunity from patent infringement claims, actions and suits based on any act which, if not licensed hereunder, would infringe, contributorily infringe or induce the infringement of any First Data Patent, and
 
(b) pursuant to such immunity, a worldwide, royalty-free, non-exclusive license under the First Data Patents to (i) make, have made (including authorizing others to provide to Western Union for its own use), use (on behalf of First Data or for the benefit of its customers), have used, sell, offer to sell, lease, import and otherwise transfer any machine, system, process or product, or any component thereof, (ii) provide and have provided any service, (iii) provide and have provided any software to third parties, and (iv) practice and have practiced any process or method.
 
5.3 Except as specifically provided otherwise in this Agreement, the immunity and licenses granted under this Section 5.0 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization and not related to acquisition of the assigning party by a third party), and do not include the right to sublicense any other party unless such sublicense is granted to a third party for the exclusive purpose of having products, processes, services, etc. provided to a Party.
 
5.4 The immunity and licenses granted under this Section 5.0 extend to and from Subsidiaries of the parties. Each Subsidiary shall be bound by the terms and conditions of this Agreement as if it were a named party hereto. If at any time a Subsidiary of a party ceases to be a Subsidiary, then (a) any immunity and licenses to such Subsidiary under the patents of the
 
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other party shall continue, but only to the business operations of the Subsidiary (and its products and services) existing at the time it ceased to be a Subsidiary, and (b) any immunity and licenses on behalf of such Subsidiary to the other party shall continue, notwithstanding its ceasing to be a Subsidiary.
 
5.5 Nothing in this Section 5.0 shall be deemed an obligation on the part of either party to provide trade secrets, know-how or any technical information to the other, nor shall be construed as granting by implication, estoppel or otherwise any rights or licenses other than those expressly stated. Subject to either Party’s rights in patents, either Party shall be free to use any ideas, concepts, or know-how that may be or was learned, exchanged, or developed while Western Union was a subsidiary of First Data without compensation to the other Party insofar as such ideas, concepts and know-how are retained in the unaided memory of the employees of either Western Union or First Data.
 
5.6 Nothing in this Section 5.0 shall be deemed a grant of immunity from any claim, action, or suit other than as specifically provided herein.
 
6.0 LICENSING OF WESTERN UNION CONTROLLED PATENTS
 
6.1 Western Union shall have the exclusive right (as between itself and First Data) to grant licenses under the Western Union Controlled Patents. The grant of any such license, and the terms thereof, shall be within the sole discretion of Western Union, but subject to the rights granted to First Data under Sections 4.0 and 8.0. First Data shall have no right to an accounting by Western Union or to otherwise share in any royalties received by Western Union under any such license.
 
6.2 Upon written request of First Data, such request identifying a specific Western Union Controlled Patent and a third party, Western Union shall notify First Data in writing whether such third party has been granted a license under that Western Union Controlled Patent.
 
7.0 LICENSING OF FIRST DATA CONTROLLED PATENTS
 
7.1 First Data shall have the exclusive right (as between itself and Western Union) to grant licenses under the First Data Controlled Patents. The grant of any such license, and the terms thereof, shall be within the sole discretion of First Data, but subject to the rights granted to Western Union under Sections 4.0 and 9.0. Western Union shall have no right to an accounting by First Data or to otherwise share in any royalties received by First Data under any such license.
 
7.2 Upon written request of Western Union, such request identifying a specific First Data Controlled Patent and a third party, First Data shall notify Western Union in writing whether such third party has been granted a license under that First Data Controlled Patent.
 
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8.0 ASSERTION OF WESTERN UNION CONTROLLED PATENTS
 
8.1 Western Union, and not First Data, shall have the sole and exclusive right (in its sole discretion) to assert and bring legal action against others for infringement (including past infringement) of the Western Union Controlled Patents, except under the limited circumstances provided in Paragraph 8.2 below. First Data agrees to be bound by any decision in such action as to the affected Western Union Controlled Patents. If, notwithstanding the foregoing, First Data is required by law or by the court to be a party to such action, First Data shall waive venue and permit itself to be joined as a party; however, in this instance, First Data shall not incur any expenses as a joined party. Settlement decisions shall be made, with respect to the Western Union Controlled Patents, by Western Union, unless First Data has been joined voluntarily as a party. If First Data joined voluntarily as a party, settlement decisions shall be made jointly with the cost of settlement and any benefits being shared between the Parties pursuant to Section 8.2.
 
8.2 As the only exception to the sole and exclusive right of Western Union to assert the Western Union Controlled Patents, should legal action be brought against First Data in any jurisdiction claiming infringement by First Data of a patent of a third party issued in the U. S. or any other country, then First Data may assert any one or more of the Western Union Controlled Patents against such third party for infringement (including past infringement) thereof, by bringing legal action for monetary and equitable relief against such third party with Western Union’s written consent, which shall not be unreasonably withheld. In determining whether Western Union is acting reasonably, it may take into account all appropriate factors including i) value of the suit; ii) value of the Western Union Controlled Patent; iii) the presence of a good faith belief of infringement of the patent by the third party’s methods, systems or processes, iv) likelihood of success on the merits; v) the potential harm to Western Union if the Western Union Controlled Patent were to be invalidated or its claims limited; and vi) the effort and/or expense that First Data would have to incur in order to modify its product or service to avoid infringement. First Data may not grant a license under the Western Union Controlled Patents in settlement of such action, without the prior written approval and authorization of (and agreed compensation to) Western Union. Under the limited circumstances provided under this Paragraph 8.2, First Data shall provide written notice of its intent to assert such patents. Such notice shall include (a) the name of the third party, (b) the circumstances (including relevant dates) leading to such assertion, and (c) a summary of all information known to First Data relating to the infringement by the third party, and shall be delivered to Western Union at least thirty (30) days prior to First Data’s proposed commencement of an infringement action. Any such assertion shall have a good faith and reasonable basis for claiming infringement by the third party. Western Union shall have the right (to be exercised within ten (10) days after receiving the assertion notice) to have both parties jointly retain counsel (skilled in patent law and selected by mutual agreement) to assist in determining whether to grant or withhold its consent as provided in this paragraph, with such advice and related discussions to be maintained as privileged and confidential. Such determination shall be made within thirty (30) days after delivery of the assertion notice from First Data. If Western Union does not respond to the notice within thirty (30) days, First Data may commence the action.
 
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Western Union may, at its option, elect to join as a voluntary party to such legal action prior to its commencement, in which event Western Union shall (a) share equally in the cost (including attorney fees) of such action, (b) have the right to participate (in good faith) in such action with counsel of its own choosing and at its own expense, (c) be entitled to share equally in all damages that may be awarded (or made in settlement) against the third party on account of the Western Union Controlled Patents after deduction of both parties’ costs (including attorney fees), and (d) have control over any matters that affect or are likely to affect the validity or enforceability (including future economic value) of the Western Union Controlled Patents, including the future enforceability against such third party. First Data shall have control over all other matters arising in such action or its settlement (provided any settlement relating to the Western Union share of damages is agreed to by Western Union).
 
If Western Union declines to join as a voluntary party to such action prior to its commencement, it agrees to be bound by any decision in or settlement of such action as to the affected Western Union Controlled Patents. In such event, all costs and expenses of such action shall be borne by First Data, and First Data shall be entitled to receive all damages that may be awarded (or made in settlement). If notwithstanding the foregoing, Western Union is required by law or by the court to be a party to such action, Western Union shall waive venue and permit itself to be joined as a party.
 
8.3 The rights granted to First Data under Section 8.2 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization not related to the acquisition of First Data by a third party).
 
9.0 ASSERTION OF FIRST DATA CONTROLLED PATENTS
 
9.1 First Data, and not Western Union, shall have the sole and exclusive right (in its sole discretion) to assert and bring legal action against others for infringement (including past infringement) of the First Data Controlled Patents, except under the limited circumstances provided in Paragraph 9.2 below. Western Union agrees to be bound by any decision in such action as to the affected First Data Controlled Patents. If, notwithstanding the foregoing, Western Union is required by law or by the court to be a party to such action, Western Union shall waive venue and permit itself to be joined as a party; however, in this instance Western Union shall not incur any expenses as a joined party. Settlement decisions shall be made, with respect to the First Data Controlled Patents, by First Data, unless Western Union has been joined as a party. If Western Union joined voluntarily as a party, settlement decisions shall be made jointly, with cost of settlement and any benefits being shared between the Parties pursuant to Section 9.2.
 
9.2 As the only exception to the sole and exclusive right of First Data to assert the First Data Controlled Patents, should legal action be brought against Western Union in any jurisdiction claiming infringement by Western Union of a patent of a third party issued in the U. S. or any other country, then Western Union may assert any one or more of the First Data Controlled Patents against such third party for infringement (including past infringement) thereof, by bringing legal action for monetary and equitable relief against such third party with First Data’s written consent, which shall not be unreasonably withheld. In determining whether
 
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First Data is acting reasonably, it may take into account all appropriate factors including i) value of the suit; ii) value of the First Data Controlled Patent; iii) the presence of a good faith belief of infringement of the patent by the third party’s methods, systems or processes, iv) likelihood of success on the merits; v) the potential harm to First Data if the First Data Controlled Patent were to be invalidated or its claims limited; and vi) the effort and/or expense that Western Union would have to incur in order to modify its product or service to avoid infringement Western Union may not grant a license under the First Data Controlled Patents in settlement of such action, without the prior written approval and authorization of (and agreed compensation to) First Data. Under the limited circumstances provided under this Paragraph 9.2, Western Union shall provide written notice of its intent to assert such patents. Such notice shall include (a) the name of the third party, (b) the circumstances (including relevant dates) leading to such assertion, and (c) a summary of all information known to Western Union relating to the infringement by the third party, and shall be delivered to First Data at least thirty (30) days prior to Western Union’s commencement of an infringement action. Any such assertion shall have a good faith and reasonable basis for claiming infringement by the third party. First Data shall have the right (to be exercised within ten (10) days after receiving the assertion notice) to have both parties jointly retain counsel (skilled in patent law and selected by mutual agreement) to assist in determining whether to grant or withhold its consent as provided in this paragraph, with such advice and related discussions to be maintained as privileged and confidential. Such determination shall be made within thirty (30) days after delivery of the assertion notice from Western Union. If First Data does not respond to the notice within thirty (30) days, Western Union may commence the action.
 
First Data may, at its option, elect to join as a voluntary party to such legal action prior to its commencement, in which event First Data shall (a) share equally in the cost (including attorney fees) of such action, (b) have the right to participate (in good faith) in such action with counsel of its own choosing and at its own expense, (c) be entitled to share equally in all damages that may be awarded (or made in settlement) against the third party on account of the First Data Controlled Patents after deduction of both parties’ costs (including attorney fees) and (d) have control over any matters that affect or are likely to affect the validity or enforceability (including future economic value) of the First Data Controlled Patents, including the future enforceability against such third party. Western Union shall have control over all other matters arising in such action or its settlement (provided any settlement relating to the First Data share of damages is agreed to by First Data).
 
If First Data declines to join as a voluntary party to such action prior to its commencement, it agrees to be bound by any decision in or settlement of such action as to the affected First Data Controlled Patents. In such event, all costs and expenses of such action shall be borne by Western Union, and Western Union shall be entitled to receive all damages that may be awarded (or made in settlement). If notwithstanding the foregoing, First Data is required by law or by the court to be a party to such action, First Data shall waive venue and permit itself to be joined as a party.
 
9.3 The rights granted to Western Union under Section 9.2 are personal, non-transferable and non-assignable (other than to a successor resulting from an internal corporate reorganization not related to acquisition of Western Union by a third party).
 
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10.0 JOINTLY OWNED PATENTS — PROSECUTION AND MAINTENANCE
 
10.1 Western Union shall have sole control over and be responsible for the prosecution and maintenance of the Western Union Controlled Patents (including all costs and expenses in connection therewith). In the event Western Union decides to abandon any Western Union Controlled Patent, it shall use reasonable efforts to notify First Data in writing at least thirty (30) days prior to such abandonment. Upon such notification, First Data may, at its option, elect to assume full and complete control over and bear all costs in connection with such patent. Upon such election, Western Union agrees to promptly transfer all of its ownership interest in such patent to First Data, and thereafter such patent shall be deemed a First Data Patent for purposes of this Agreement (with immunity and licenses under such patent conveyed to Western Union pursuant to Section 5.0 above).
 
10.2 First Data shall have sole control over and be responsible for the prosecution and maintenance of the First Data Controlled Patents (including all costs and expenses in connection therewith). In the event First Data decides to abandon any First Data Controlled Patent, it shall use reasonable efforts to notify Western Union in writing at least thirty (30) days prior to such abandonment. Upon such notification, Western Union may, at its option, elect to assume full and complete control over and bear all costs in connection with such patent. Upon such election, First Data agrees to promptly transfer all of its ownership interest in such patent to Western Union, and thereafter such patent shall be deemed a Western Union Patent for purposes of this Agreement (with immunity and licenses under such patent conveyed to First Data pursuant to Section 5.0 above).
 
10.3 Upon request, each party will provide to the other a copy of any patent issuing after the date of this Agreement, for which such party has the responsibility for prosecution and maintenance under this Section 10. Such party shall also permit the other, at its expense, to inspect and make copies of the content of its file wrapper (as it customarily maintains such file, but excluding any attorney-client privileged material) for any such patent at any time prior to or after issuance.
 
10.4 The party having responsibility for prosecution and maintenance under this Section 10.0 shall have sole discretion as to all matters pertaining to such prosecution and maintenance, and shall have no liability to the other for any action, failure to take action or decision in connection therewith, including for abandonment or for failure to notify the other of abandonment as required in Paragraphs 10.1 or 10.2. Notwithstanding any other provision in this Agreement, the party not having responsibility for prosecution and maintenance can request in writing the ability to file any divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals of any such patents controlled by the other party, provided that any such divisions, continuations, continuations-in-part, re-examinations, reissues, extensions or renewals shall meet applicable laws and regulations governing the filing of such patents.
 
10.5 Each party shall provide, upon request of the other, reasonable cooperation (including making inventor-employees reasonably available) to the other as may be required in
 
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the course of prosecution and enforcement of the Western Union Controlled Patents or the First Data Controlled Patents, at the requesting party’s expense.
 
11.0 LICENSING AND ENFORCEMENT DISCUSSIONS; THIRD PARTY INFRINGEMENT; INDEMNIFICATION
 
11.1 If either party becomes aware of infringement by a third party of any jointly owned patent controlled by the other party, it shall notify the other party in writing of such infringement.
 
11.2 If one party is required by law or by a court to be a party to an action (by virtue of being a joint owner, and after having elected not to be a party to the action) against a third party brought by the other, such party shall appear as a party to such action and be indemnified by the other party against any costs and expenses (including reasonable attorney fees) in connection with such action. If one party enforces a patent (and the other party is not a party to such enforcement action), the other party shall be indemnified by the first party against any costs and expenses (including reasonable attorney fees) in connection with such action.
 
12.0 TERM
 
The term of this Agreement shall be from the date hereof until the expiration of the last to expire of the Western Union Patents, First Data Patents, Western Union Controlled Patents, and First Data Controlled Patents, with the term as respects each individual Patent expiring on the date that the patent expires or otherwise becomes abandoned, unenforceable, or invalid.
 
13.0 ACQUISITION OF A PARTY
 
13.1 In the event either party is Acquired by a third party (“Buyer”) at any time during the term of this Agreement, then:
 
(a) the immunity and licenses granted under Section 5.0 shall continue for both parties, but as to the Acquired party such immunity and licenses shall extend only to the business operations of the Acquired party (and its products and services) existing at the time of acquisition, and shall not extend to the Buyer as a whole;
 
(b) if Western Union is the Acquired party, it shall transfer, effective upon the date of its acquisition, all of its ownership rights in the First Data Controlled Patents to First Data and such patents shall thereafter be deemed First Data Patents for purposes of this Agreement (including Section 5.0 above); and
 
(c) if First Data is the Acquired party, it shall transfer, effective upon the date of its acquisition, all of its ownership rights in the Western Union Controlled Patents to Western Union and such patents shall thereafter be deemed Western Union Patents for purposes of this Agreement (including Section 5.0 above).
 
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13.2 Any transfer of ownership pursuant to Paragraph 13.1(b) and 13.1(c) above shall be subject to any prior licenses granted by the transferor, and such transfer shall not operate to release the transferor from any obligations it has under such prior license or to impose any such obligations on the transferee.
 
13.3 For purposes of this Agreement, an entity shall be “Acquired” if (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes a beneficial owner (or otherwise has the authority to vote), directly or indirectly, securities representing more than 50% of the total voting power of such entity’s then outstanding voting securities, or (ii) such entity becomes a party to a merger, consolidation or share exchange (other than a re-incorporation or the establishment of a holding company involving no change in ownership of the entity) and either (x) such entity is not in substance the surviving corporation or (y) as a result of such transaction, such entity’s board of directors is reconstituted so that a majority of such board of directors consists of individuals who were not directors prior to such transaction. Notwithstanding the foregoing, an entity shall not be deemed “Acquired” in the event of an internal corporate reorganization not involving a third party.
 
14.0 ALLOCATION OF PATENTS
 
It is acknowledged by both parties that reasonable efforts have been undertaken prior to the Separation to allocate the patents previously owned by their combined businesses, with the allocation based on the overall relevance of individual patents to one party or the other. If, after the date of this Agreement, either party notifies the other of a reasonable basis for believing that a patent has been improperly allocated to one party (solely owned or controlled by that party) when it should have been allocated to the other, both parties agree to negotiate in good faith to determine the proper allocation of such patent and to establish any other terms as may be equitable in connection with such patent or its allocation to the proper party.
 
15.0 MISCELLANEOUS
 
15.1 Confidentiality . Information concerning the First Data Patents and the Western Union Patents, to the extent it meets the definition of Confidential Information under the Separation Agreement, shall be the Confidential Information of First Data and Western Union, respectively, under the Separation Agreement. However, nothing herein shall preclude either party from responding to a third party inquiry as to the scope of its licensing or enforcement rights under any patent which is the subject of this Agreement.
 
15.2 Headings and Interpretation . Regardless of which Party may have drafted this Agreement or any part thereof, no rule of strict construction shall be applied against either Party or any of its Affiliates. If any provision of this Agreement is determined by a court of law to be invalid, illegal, or unenforceable pursuant to a judicial decree or decision, the Parties shall deem the provision to be modified to the extent necessary to allow it to be enforced to the extent permitted by law, or if it cannot be so modified, the provision will be severed and deleted from this Agreement, and the remainder of this Agreement shall continue to be binding and enforceable according to its terms. In this Agreement:
 
(a) references to the singular include references to the plural and words denoting any gender shall include all genders;
 
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(b) the headings in this Agreement do not affect its interpretation;
 
(c) references to a party to this Agreement include references to its successors or assigns (immediate or otherwise of that party) as such are appointed in accordance with the terms of this Agreement;
 
(d) references to a clause, section, paragraph or Exhibit are to a clause, section, paragraph or Exhibit to this Agreement and references to this Agreement include the Exhibits;
 
(e) any reference to a document being “ in writing ” includes any communication made by letter, facsimile transmission or email provided neither party may exercise any rights to terminate this Agreement or any of the services in it or make any notifications under clause 24 (termination) by email;
 
(f) in the event of any conflict or inconsistency between these Terms and Conditions and any of the other Exhibits or other Agreements as referenced herein, these Terms and Conditions shall prevail to the extent of that conflict or inconsistency unless expressly stated otherwise or agreed by the parties in writing; and,
 
(g) any reference, express or implied, to an enactment (which includes any legislation in any jurisdiction) includes references to (i) that enactment as re-enacted, amended, extended or applied by or under any other enactment (before or after the signature of this Agreement); or (ii) any subordinate legislation made (before or after the signature of this Agreement) under such enactment.
 
(h) Words and expressions defined in any clause shall, unless the application of any such word or expression is specifically limited to that clause, bear the meaning assigned to such word or expression throughout this Agreement.
 
(i) Terms other than those defined within this Agreement and its exhibits will be given their plain English meaning, and those terms, acronyms, and phrases known in the information technology industry will be interpreted in accordance with their generally accepted meanings.
 
(j) Defined terms appearing in this Agreement and its Schedules in title case shall be given their meaning as defined, while the same terms appearing in lower case shall be interpreted in accordance with their plain English meaning, and shall, unless the context otherwise requires, include the terms as defined.
 
(k) Reference to months or years shall be construed as calendar months (i.e. one or more of the twelve periods into which a conventional year is divided) or conventional years (i.e. 1 January to 31 December). Reference to “days” shall be construed as calendar days unless qualified by the word “business”, in which instance a “business day” shall be any day other than a Saturday, Sunday
 
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or public holiday. Any reference to “business hours” shall be construed as being the hours between 08h00 (eight hours) and 17h00 (seventeen hours) on any business day. Any reference to time shall be based upon Eastern Standard Time.
 
(l) Unless specifically otherwise provided, any number of days prescribed shall be determined by excluding the first and including the last day or, where the last day falls on a Saturday, Sunday or public holiday, the next succeeding business day.
 
(m) Where figures are referred to in numerals and in words, and there is any conflict between the two, the words shall prevail, unless the context indicates a contrary intention.
 
(n) The words “include” and “including” mean “include without limitation” and “including without limitation”. The use of the words “include” and “including” followed by a specific example or examples shall not be construed as limiting the meaning of the general wording preceding it: the application of the eiusdem generis rule is excluded.
 
15.3 Severability . If any provision of this Agreement or any document referred to in it is held to be illegal, invalid or unenforceable by any court of competent jurisdiction or Governmental Authority in whole or in part this Agreement shall continue to be valid as to its other provisions and the remainder of the affected provision. The parties shall negotiate in good faith to agree to a substitute provision for any such provision held to be invalid. Any invalidity in one legal jurisdiction shall not affect the validity of any of the provisions of this Agreement in any other legal jurisdiction in which this Agreement may apply or otherwise take effect.
 
15.4 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Delaware.
 
15.5 Notices . All notices or other communications required to be given hereunder shall be in writing and delivered either personally or by United States Postal Service, facsimile, or electronic mail, and addressed as provided in this Agreement or as otherwise requested by the receiving party. Notices delivered personally shall be effective upon delivery and notices delivered by mail shall be effective upon their receipt by the party to whom they are addressed. The appropriate addressees are:

For Western Union :	 	For First Data :	
		
Intellectual Property Counsel	 	Intellectual Property Counsel	
12500 E. Belford Ave.	 	6200 S. Quebec Street	
Englewood, CO 80112	 	Greenwood Village, CO 80111	
Fax: (720) 332-0519	 	Fax: (303) 967-5258	
 
(ii) Dispute Resolution . If the disputing Parties are unable to resolve any Dispute, then such Dispute shall be governed by the Dispute Resolution procedures contained in Article XIII of the Separation Agreement.
 
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15.6 Assignment . This Agreement is personal to the Parties and their Affiliates. Neither this Agreement nor any right or obligation under this Agreement shall be assignable or assumable, without the prior written consent of other Party, which consent may be withheld at the sole discretion of such other Party.
 
15.7 Survival . The following provisions of this Agreement will survive the expiration or any termination of this Agreement: Sections 3 and 11, and any other provision that by its terms or implication is intended to survive.
 
15.8 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 
15.9 Entire Agreement . This Agreement (together with any documents referred to herein) contains the entire agreement and understanding of the parties and supersedes all prior agreements, understandings or arrangements (both oral and written) relating to the subject matter of this Agreement. Each of the parties acknowledges and agrees that:
 
 	(i)	it does not enter into this Agreement on the basis of and does not rely, and has not relied, upon any statement, representation, warranty, forecast or other information (in any case whether oral, written, express or implied) made, given or agreed to by any person (whether negligently or innocently and whether or not made by a party to this Agreement) which is not expressly contained or referred to in this Agreement (a “ Representation ”);	
 
 	(ii)	nothing in this Agreement is intended to provide any representations or warranties, including any relating to ownership or freedom from infringement, as to any of the First Data Patents, Western Union Patents, First Data Controlled Patents, or Western Union Controlled Patents, or to create any exception to the exclusion of representations and warranties contained in Section 7.1 and 7.2 of the Separation Agreement;	
 
 	(iii)	it shall have no remedy (including any rights to damages or rescission in an action for misrepresentation) for any Representation which was, is or becomes false or misleading;	
 
 	(iv)	the only remedy available in respect of any misleading or false warranty or other term contained in this Agreement shall be a claim for breach of contract under this Agreement	
 
save that nothing in this Agreement shall exclude or restrict a party’s rights, remedies or liability under the law governing this Agreement in respect of any fraud or fraudulent misrepresentation.
 
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf by its officers thereunto duly authorized, as of the date and year first written above.

 FIRST DATA CORPORATION	 		 	THE WESTERN UNION COMPANY	
					
By:	 	  	 		 	By:	 	  	
	 	Name:	 		 		 	Name:	
	 	Title:	 		 		 	Title:	
 
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EXHIBIT A
FIRST DATA PATENTS
 
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EXHIBIT B
FIRST DATA CONTROLLED PATENTS
 
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EXHIBIT C
WESTERN UNION PATENTS
 
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EXHIBIT D
WESTERN UNION CONTROLLED PATENTS
 
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Exhibit 10.5
RETAIL MONEY ORDER ISSUANCE AND MANAGEMENT AGREEMENT
By and between
INTEGRATED PAYMENT SYSTEMS INC.
and
WESTERN UNION FINANCIAL SERVICES, INC.
 
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SCHEDULES

Schedule 2.1(A)	  	WU Services	
Schedule 2.1(B)	  	Contract Schedule	
Schedule 2.2	  	Payment for WU Services	
Schedule 5.5	  	IPS Services	
Schedule 7.4	  	Equipment	
 
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AGREEMENT
THIS RETAIL MONEY ORDER ISSUANCE AND MANAGEMENT AGREEMENT (this “ Agreement ”), dated as of August 14, 2006, by and between Western Union Financial Services, Inc., a Colorado corporation (“ WU ”) and Integrated Payment Systems Inc., a Delaware corporation (“ IPS ”).
RECITALS
WHEREAS , IPS desires to retain WU to manage IPS’ agents that currently issue and sell money orders at retail locations specified herein and to perform certain data processing and other related services (collectively the “ Services ”); and
WHEREAS , WU desires to perform the Services for IPS, all on the terms and conditions and for the consideration set forth herein.
NOW, THEREFORE , for and in consideration of the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, WU and IPS hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions . In this Agreement, the following terms have the meanings specified or referred to in this Section 1.1 :
“ Account Manager ” has the meaning specified in Section 2.4(a) .
“ Additional Term ” has the meaning specified in Section 9.1(b) .
“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person; provided, however, IPS and WU shall not be considered Affiliates of each other for purposes of this Agreement.
“ Agreement ” has the meaning specified in the Preamble.
“ Business ” means sale of Money Orders at locations covered by IPS Agreements.
“ Business Day ” means any day other than Saturday, Sunday and those legal public holidays specified in 5 U.S.C. §6103(a), as it may be amended from time to time, or any successor provision, on which banking institutions in the city of Denver, Colorado are open for business. If a payment date under this Agreement is not a Business Day, payment shall be made on the next succeeding Business Day.
 
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“ Claim Notice ” has the meaning specified in Section 10.4(a) .
“ Closing Date ” has the meaning specified in Article IV .
“ COBRA ” means the provisions set forth in Sections 601 to 608 of ERISA or Section 4980B of the Code.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Confidential Information ” has the meaning specified in Section 8.2(d).
“ Contract Schedule ” means Schedule 2.1 (B).
“ Counterfeit Item” means a paper payment instrument that is a counterfeit of an Item and the MICR line specifications for that counterfeit item match the MICR line specifications for a Money Order.
“ Court Order ” means any judgment, order, award or decree of any foreign, federal, state, local or other court or tribunal and any award in any arbitration proceeding.
“ Distant Executive ” has the meaning specified in Section 11.13(b) .
“ Employee ” has the meaning specified in Section 8.3 .
“ Event of Default ” has the meaning specified in Section 9.3(a) .
“ Expenses ” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).
“ Force Majeure ” means any cause beyond the control of a party that such party is unable to overcome by the exercise of reasonable diligence, which may include fire; flood; explosion; war; strike; embargo; government regulation; civil or military authority; act of God; acts or omissions of carriers; or other similar causes.
“ Governmental Body ” means any foreign, federal, state, local or other governmental authority or regulatory body.
“ Governmental Permits ” has the meaning specified in Section 5.4 .
“ Indemnified Party ” has the meaning specified in Section 10.4(a) .
“ Indemnifying Party ” has the meaning specified in Section 10.4(a) .
 
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“ Initial Term ” has the meaning specified in Section 9.1(a) .
“ IPS ” has the meaning specified in the Preamble. In addition, with respect to business conducted in Canada, the term “IPS” shall include the Integrated Payment Systems Canada Inc., a Canadian corporation, which is a wholly-owned subsidiary of Integrated Payment Systems Inc.
“ IPS Agreements ” means the contracts listed on Schedule 2.1 (B) , including any renewals thereof, and the contracts executed pursuant to Schedule 2.1 (A), Section 1 (b)  hereof.
“ IPS Client ” means, in the case of each IPS Agreement, the party other than IPS and WU to such IPS Agreement.
“ IPS Group Member ” means IPS and its Affiliates and their respective successors and assigns.
“ Issue Statements ” has the meaning specified in Section 11.13(a) .
“ Item ” means a Money Order.
“ Legal Requirements ” means all federal, state and local laws, regulations and judicial and administrative decisions and interpretations applicable to the Business.
“ Losses ” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.
“ Money Order ” means a paper payment instrument that is named and denominated as a money order and that is sold pursuant to an IPS Agreement to a purchaser for the purpose of the purchaser’s effecting a payment to a third party. The term “Money Order” also includes a paper payment instrument that is issued directly by IPS, provided that the issuance of such instrument falls within one of the product codes listed on Schedule 2.1 (B) . The term “Money Order” also includes refund checks issued by WU for IPS as further described on Schedule 2.1 (A) .
“ Notice of Default ” has the meaning specified in Section 9.3(b) .
“ Party ” means IPS or WU.
“ Patent License” has the meaning specified in Section 8.6 .
“ Person ” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Body.
“ POS Equipment ” has the meaning specified in Section 7.4 .
“ Service Fees ” has the meaning specified in Section 2.2(a) .
 
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“ Senior Executives ” has the meaning specified in Section 11.13(a) .
“ Tax ” (and with correlative meaning, “ Taxes ”) means: (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp or environmental (including taxes under Code Section 59A) tax, or any other tax custom, duty or other like assessment or charge of any kind whatsoever, together with any interest or any penalty; and (ii) any liability for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation under any Tax sharing arrangement or Tax indemnity arrangement.
“ Term ” has the meaning specified in Section 9.1(b) .
“ Trade Secrets ” means confidential ideas, trade secrets, know-how, concepts, methods, processes, practices, formulae, reports, data, customer lists, mailing lists, business plans or other proprietary information.
“ Transaction Tax ” has the meaning specified in Section 8.1 .
“ User Manual has the meaning specified in Schedule 5.5 .
“ WU ” has the meaning specified in the Preamble. In addition, with respect to business conducted in Canada, the term “WU” shall include the Western Union Financial Services (Canada), Inc., an Ontario corporation, which is a wholly-owned subsidiary of Western Union Financial Services, Inc.
“ WU Agreement ” has the meaning specified in Section 7.3 .
“ WU Group Member ” means WU and its Affiliates and their respective successors and assigns.
“ WU Services ” has the meaning specified in Section 2.1(a) .
“ WU Statement ” has the meaning specified in Section 2.2 (b) .
“ WU Service Location ” means 12500 East Belford Avenue, Englewood, Colorado 80112, or as otherwise permitted in accordance with Section 2.6 .
1.2. Interpretation . (a) In this Agreement, unless the context clearly indicates otherwise:
(i) words used in the singular include the plural and words in the plural include the singular;
(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;
 
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(iii) reference to any gender includes the other gender;
(iv) the word “including” means “including but not limited to” or “including without limitation”;
(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
(viii) reference to any statute means such statute (including all rules and regulations promulgated thereunder) as amended from time to time and includes any successor legislation thereto;
(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;
(x) in the event of any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control; and
(xi) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement.
(b) This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against either Party shall not apply to any construction or interpretation hereof. Subject to Section 11.10 , this Agreement shall be interpreted and construed to the maximum extent possible so as to uphold the enforceability of each of the terms and provisions hereof, it being understood and acknowledged that this Agreement was entered into by the Parties after substantial negotiations and with full awareness by the Parties of the terms and provisions hereof and the consequences thereof.
 
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ARTICLE II
SERVICES
2.1. WU Services . (a) Subject to the terms and conditions stated herein, commencing on the Closing Date and continuing throughout the Term, WU shall provide (or cause one of its Affiliates to provide) the services set forth on Schedule 2.1(A ) (collectively, the “ WU Services ”), in accordance with the procedures and standards set forth on Schedule 2.1(A) and in the User Manuals, for each Money Order issued during the Term hereof.
(b) In the event that WU wishes to designate a WU Affiliate or a third party to perform any of the WU Services, WU shall be permitted to do so so long as the transferred WU Services are performed in compliance with this Agreement. WU shall remain responsible and liable for all WU Services provided hereunder, whether performed by WU, by a WU Affiliate or by a third party.
(c) Except as expressly provided herein, no interest whatsoever in any IPS Agreement is or will be transferred to WU under this Agreement. All payments to be made to IPS under the IPS Agreements, whether by IPS Clients or otherwise, shall continue to be for the account of IPS, and the only remuneration of, or financial benefit to WU with respect to the IPS Agreements shall be the fees for the WU Services as set forth on Schedule 2.2 .
(d) In performing the WU Services, WU may make no use of the names or trademarks of IPS or any of its Affiliates, except as is essential in order to perform the WU Services in accordance with Schedule 2.1(A) .
2.2. Payment for WU Services . In consideration for providing the WU Services to IPS, IPS shall pay WU the fees (the “ Service Fees ”) set forth on Schedule 2.2 .
2.3. Quality of WU Services . (a) WU shall provide the WU Services to IPS in accordance with the User Manuals, in substantially the same manner as WU performs such aspect for itself and in compliance with all Legal Requirements applicable to the Business and to WU as the provider of the WU Services.
(b) The data and information submitted by WU to IPS shall be accurate and complete, and WU shall be responsible for any errors in and with respect to the data and information submitted to IPS; provided , however , WU shall not be responsible for, and shall not be required to indemnify IPS with respect to, incomplete, inaccurate or erroneous data or information to the extent such inaccuracy, incompleteness or error results from any inaccuracy, incompleteness or error in the data received by WU from IPS. To the extent WU is responsible for the inaccuracy, incompleteness or error, WU shall promptly correct such errors or inaccuracies in the data or information prepared by WU and submitted to IPS, but such correction shall not limit WU’s indemnification obligations under Article X .
(c) WU shall provide access to the WU Service Locations to such auditors, internal and external, and inspectors as IPS or any regulatory authority may designate. Audits by regulatory authorities will occur on such occasions as the regulatory authority requires and with
 
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such notice as the regulatory authority permits. Such auditors and inspectors will be required to sign appropriate confidentiality agreements and will be escorted by WU personnel while performing any audits or inspections (to the extent permitted by the regulatory authority, in the case of audits required by regulatory authorities). All audits or inspections of the WU Service Locations and the WU Services that are required by IPS or by a regulatory authority having jurisdiction over IPS will be at the expense of IPS. WU shall provide such auditors and inspectors any assistance that they may reasonably require. IPS shall not be required to reimburse WU for the costs or time of the WU employees providing such assistance or related overhead. If any audit by an auditor designated by IPS or a regulatory authority having jurisdiction over IPS or WU results in WU being notified that it is not in compliance with any relevant and generally accepted accounting principle or other audit requirement relating to the WU Services, then:
(i) if the non-compliance was in existence prior to the date of this Agreement, WU will make such change at WU’s own expense; or
(ii) if the non-compliance arose after the date of this Agreement and the change is requested by IPS in order to comply with its auditors or regulators, WU shall make the change at IPS’ expense and any incremental recurring costs related to such change shall be at IPS’ expense; provided , however , that if WU would otherwise be required to make such change if it were the issuer of Money Orders hereunder, WU shall make the change at its own expense and WU shall bear any incremental recurring costs related to such change.
In the event of a dispute between WU and IPS relating to a notification of non-compliance received by WU from an auditor or regulatory authority, WU and IPS shall resolve such dispute in accordance with the procedures described in Section 11.13 .
2.4. WU Personnel . WU shall designate an individual who shall be responsible for implementing the WU Services (“ Account Manager ”).
2.5. Location of WU Services . The WU Services shall be performed by WU at the WU Service Locations. WU may change any WU Service Location to a location where WU performs the same services for a majority of money orders processed by WU (including, but not limited to, Items). If a location is to be changed, WU will provide IPS thirty (30) calendar days’ prior notice. If required by law or IPS’ regulators, WU must obtain IPS’ prior written consent to change any WU Service location, which consent will not be unreasonably withheld.
2.6. Safety and Security Standards . As part of the WU Services, WU shall maintain and enforce at the WU Service Locations such safety and security procedures as are required to meet the applicable regulatory standards. The safety and security procedures shall protect the data and information of IPS and its customers from unauthorized access. In the event WU suffers a data security breach with respect to any of IPS’ data, WU shall promptly notify IPS of such event.
 
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2.7. Effect of Non-Performance of Either Party . In the event that either Party fails to timely perform any task assigned to it pursuant to this Agreement, the other Party shall be excused from performing any subsequent task therein that is dependent upon, and cannot be performed in the ordinary course of the provision of the WU Services without, the performance of the non-performed task, until the non-performed task is performed, and the time period for performing such subsequent task shall commence only when the non-performed task is completed in accordance therewith. The excuse from performance provided in this Section 2.7 does not limit any remedy otherwise available to the Party so excused, including the right of the Party so excused to perform the non-performed task if practicable.
ARTICLE III
MANAGEMENT OF THE IPS CLIENTS
3.1 IPS Agreements . Certain provisions relating to IPS Agreements are set forth in Schedule 2.1 (A).
3.2 Limitations on WU’s Obligations . Certain limitations on WU’s obligations as manager of the Business are set forth in Schedule 2.1 (A) .
ARTICLE IV
CLOSING
The closing shall occur by mutual agreement of the Parties as evidenced by the execution of a certificate specifying the date of the closing (sometimes referred to herein as the “ Closing Date ”) by each of the Parties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IPS
As an inducement to WU to enter into this Agreement and to consummate the transactions contemplated hereby, IPS represents and warrants to WU and agrees as follows:
5.1. Organization of IPS . IPS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. IPS has full corporate power and authority to own, operate and use the assets used in connection with the Business and to carry on the Business as now conducted.
5.2. Authority of IPS . IPS has full corporate power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by IPS have been duly authorized and approved by IPS and do not require any further authorization or consent of IPS or its stockholder. This Agreement has been duly executed and delivered by IPS and is the legal, valid and binding obligation of IPS enforceable in accordance with its terms.
 
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5.3. Contract Schedule . The IPS Agreements referenced on the Contract Schedule are all of the agreements, contracts or understandings that have been entered into by IPS and are currently in force with sellers of Money Orders or pursuant to which Money Orders are sold.
5.4 Governmental Permits. IPS owns, holds or possesses all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a Governmental Body that are necessary to entitle it to own or lease, operate and use the assets used in connection with the Business and to carry on and conduct the Business substantially as currently conducted (collectively, the “ Governmental Permits ”), except for such Governmental Permits as to which the failure to so own, hold or possess would not have a material adverse effect on the Business.
5.5 Capacity . IPS has, and will maintain throughout the Term, the operational capacity and resources necessary to perform the services as set forth on Schedule 5.5 .
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF WU
As an inducement to IPS to enter into this Agreement and to consummate the transactions contemplated hereby, WU hereby represents and warrants to IPS and agrees as follows:
6.1. Organization of WU . WU is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. WU has full corporate power and authority to provide the WU Services and to own, operate and use its properties and assets and to carry on its business as now conducted.
6.2. Authority of WU . WU has full corporate power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by WU have been duly authorized and approved by WU and do not require any further authorization or consent of WU or its stockholder. This Agreement has been duly executed and delivered by WU and is the legal, valid and binding agreement of WU enforceable in accordance with its terms.
6.3. Capacity and Governmental Permits . WU has, and will maintain throughout the Term, the operational capacity and resources necessary to perform the WU Services in accordance with this Agreement. WU owns, holds or possesses all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from Governmental Bodies that are necessary for it to perform the WU Services in accordance with this Agreement.
 
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ARTICLE VII
CERTAIN CONTRACT AND TRANSITION RELATED PROVISIONS
7.1 Contract Provisions . Certain provisions relating to agreements with selling agents are set forth in Schedule 2.1 (A).
7.2 Termination of Certain IPS Contractual Provisions. Certain provisions relating to agreements with IPS Clients are set forth in Schedule 2.1 (A).
7.3 Transition Efforts . (a) If WU decides to issue WU branded money orders under its own licenses or to issue money orders under another third party’s licenses, IPS agrees that it will, in good faith, negotiate with WU a transition services agreement to provide WU with the types of services that IPS is providing under this Agreement as listed in Schedule 5.5 for a reasonable period of time in order to allow WU to make a smooth transition to the sale of such other money order service.
(b) After the third anniversary of the Closing Date, IPS shall have the right to require WU to agree to either (i) issue Money Orders under its own licenses (or make arrangements with another third party to issue Money Orders) and perform the obligations of the issuer of Money Orders under any IPS Agreements after the last day of the Initial Term; or (ii) cease entering into IPS Agreements that extend beyond the last day of the Initial Term.
7.4 Equipment. Point of Sale equipment, software and other equipment used in connection with the Business (collectively, all such items are referred to herein as “POS Equipment”) shall be maintained by WU. POS Equipment shall be provided to WU and the IPS Client in accordance with Schedule 7.4 .
7.5 Abandoned Property Software, Documentation and System. The abandoned property software, documentation and system utilized in the Business shall be provided to WU in accordance with Schedule 5.5 .
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Taxes . For purposes of this Section 8.1 , “Transaction Tax” shall mean any federal, state or local gross receipts, sales or use tax or other like assessment or charge. The recipient of any services rendered pursuant to this Agreement shall be responsible for any Transaction Taxes levied or imposed on the provision of such services.
8.2. Proprietary and Confidential Information . (a) Except as specifically provided in this Agreement, neither Party shall use or disclose to any third party any Confidential Information of the other Party; provided , however , that information shall not be regarded as
 
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Confidential Information if it (i) is or becomes generally available to the public other than as a result of a disclosure by one of the Parties or any of its Affiliates, as the case may be; (ii) is or becomes known or available to one of the Parties or its respective Affiliates, as the case may be, on a non-confidential basis from a source who, insofar as is known to such Party, is not prohibited from transmitting the information to such Party or its Affiliates by a contractual, legal or fiduciary obligation; or (iii) is or was developed by a Party or any of its Affiliates without the use of any Confidential Information from the other Party or any of its Affiliates. All Confidential Information shall be held in confidence by the Parties to the same extent and in at least the same manner as the Parties protect their own confidential or proprietary information.
(b) Each Party shall be permitted to disclose relevant aspects of the other Party’s Confidential Information to its officers, agents and employees and to the officers, agents and employees of its Affiliates to the extent that such disclosure is reasonably necessary for the performance of its duties and obligations under this Agreement; provided , that such Party shall take all reasonable measures to ensure that Confidential Information of the other Party is not disclosed or duplicated in contravention of this Agreement by such officers, agents and employees. In addition, WU may use IPS’ Confidential Information regarding IPS Clients for the purposes contemplated by Schedule 2.1 (A), Section 1 (b) ; provided, that such use is not in contravention of any agreement between IPS and the applicable IPS Client or such use is not prohibited by law.
(c) The obligations in this Section 8.2 shall not restrict any disclosure by either Party pursuant to any applicable law or by order of any court or government agency (provided that the disclosing Party shall give prompt notice to the non-disclosing Party of such order).
(d) As used in this Agreement, the term “ Confidential Information ” shall mean (i) with respect to IPS, all information, data and materials relating to the customers, business and affairs of IPS provided to, disclosed or received by WU from any source in connection with this Agreement or WU’s performance of the WU Services, including any Trade Secrets and the terms of any IPS Agreement, (ii) with respect to WU, all information, data and materials relating to the customers, business and affairs of WU provided to, disclosed or received by IPS from any source in connection with this Agreement, including any Trade Secrets and the terms of any WU Agreement and (iii) the terms of this Agreement.
(e) Notwithstanding the foregoing, WU shall be entitled to use Confidential Information of IPS after the termination of this Agreement to the extent use of such information is necessary in connection with its continuation of the Business after the termination of this Agreement.
8.3. Employees and Employee Benefit Plans . (a) Other than as WU may otherwise agree in its discretion by separate agreement in connection with its spin off from First Data Corp., no person who is or who has been an employee of IPS (an “ Employee ”) shall transfer employment to WU or any of its Affiliates in connection with WU’s provision of WU Services pursuant to this Agreement. Nothing contained in this Agreement shall obligate WU to employ any persons who are or who have been Employees. IPS shall retain the sole
 
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responsibility, in connection with the Employees’ employment by IPS and its Affiliates, for all matters relating to the maintenance of personnel and payroll records, the withholding and payment of federal, state and local income and payroll Taxes, the payment of workers’ compensation and unemployment compensation insurance, salaries, wages and pension, welfare and other fringe benefits, including any severance and/or pay-out of accrued vacation pay which may be triggered as a result of any termination of employment (including all severance and vacation pay liabilities incurred on or prior to the Closing Date) and the conduct of all other matters relating to labor relations, including compliance with IPS’ obligations under any applicable collective bargaining agreements and all negotiations and communications with any union. IPS shall retain liability for compliance with all applicable labor and employment laws relating to the Employees in connection with their employment by IPS or any of its Affiliates. IPS shall retain the obligation and liability for any workers’ compensation or similar workers’ protection claims with respect to any Employee in connection with the Employee’s employment by IPS or its Affiliates.
(b) IPS shall retain all liabilities under its employee benefits plans, programs, agreements and arrangements, in connection with each Employee’s employment by IPS and its Affiliates, including (a) any liabilities relating to any noncompliance with applicable laws, including COBRA, and (b) any liabilities which arise as a result of IPS’ joint and several liability through its relationship with an Affiliate. IPS shall be solely responsible to provide continuation coverage under COBRA and other any applicable law to any Employee or beneficiary of any Employee who is entitled to such continuation coverage in connection with the Employee’s employment by IPS and its Affiliates.
8.4. Insurance . During the Term, WU shall maintain the adequate and customary insurance coverages for the conduct of the Business. WU shall add IPS to the Commercial General Liability policy as an additional insured. WU shall provide IPS with a certificate of such coverage prior to the date of this Agreement. WU shall provide to IPS at least thirty (30) days prior written notice of any cancellation, modification or alteration affecting the coverage.
8.5. Independent Contractor Status . Nothing in this Agreement shall be deemed to create a partnership, joint venture or agency relationship between the Parties. WU shall render and perform the WU Services as an independent contractor in accordance with its own standards, subject to its compliance with the provisions of this Agreement and with all applicable laws, ordinances and regulations.
8.6. License to Use IPS Patent License. As further described in Schedule 2.1 (A) , IPS has granted WU a license to use an IPS patent license.
8.7. Legal Requirements . During the Term, (i) IPS agrees to conduct the Business in compliance with the Legal Requirements (but such agreement shall not limit WU’s obligation to perform the WU Services in accordance herewith), and (ii) WU agrees to perform the WU Services in compliance with all Legal Requirements applicable to the Business and to WU as the provider of the WU Services.
 
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ARTICLE IX
TERM AND TERMINATION
9.1. Term . (a) Subject to any early termination provided for in this Agreement, the term of the provision of WU Services under this Agreement begin on the effective date hereof and shall continue for a period of 5 years (the “ Initial Term ”).
(b) At any time after the first anniversary of the Closing Date, WU may request any extension of this Agreement for an additional term. If the parties are able to mutually agree to the terms of such extension (including without limitation, the length of the extension and pricing), the provision of WU Services under this Agreement may be extended for an additional term (the “ Additional Term ” and, together with the Initial Term, the “ Term ”).
(c) The provisions related to IPS’ payment for WU Services shall survive the termination of this Agreement and IPS shall continue to pay WU for the WU Services until all Money Orders have either been paid or escheated. In the event a Money Order is not subject to escheatment, the provisions related to IPS’ payment for WU Services with respect to such Money Order shall survive the termination of this Agreement and IPS shall continue to pay WU for the WU Services until such Money Order is either paid or, if not paid, until seven years after the date of issuance of such Money Order.
(d) If on the last day of the Initial Term, IPS continues to have obligations under the IPS Agreements that have not been assumed by WU, then IPS and WU agree to extend the term of this Agreement until all such obligations have been satisfied; provided, however, that during such extended Term, WU shall not be authorized to further extend the term of any IPS Agreement without the written consent of IPS.
9.2. Termination . The provision of WU Services under this Agreement may be terminated pursuant to Section 9.3 or at any time by the mutual written consent of WU and IPS.
9.3. Events of Default . (a) The occurrence of any of the following events (each, an “ Event of Default ”) shall constitute an Event of Default under this Agreement:
(i) Payment of Obligations under this Agreement . The failure by either Party to make any payment to the other when such payment is due and owing pursuant to the terms and conditions of this Agreement.
(ii) Failure to Perform . The failure of either Party to perform any material term, covenant, or agreement contained in this Agreement.
(iii) Breach of Representation or Warranty . Any representation or warranty of either Party made in this Agreement or in any document or instrument delivered pursuant to or in connection with this Agreement shall prove to have been false in any material respect upon the date when made.
 
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(iv) Insolvency, Bankruptcy, Etc .
(A) If either Party shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay or shall generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of such Party or of any substantial part of the assets of such Party or shall commence any case or other proceeding relating to such Party under any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or any such petition or application shall be filed or any such case or other proceeding shall be commenced against such Party and such Party shall indicate its approval thereof, consent thereto, or acquiescence therein.
(B) If a decree or order shall be entered appointing any such trustee, custodian, liquidator or receiver, or adjudicating either Party bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief shall be entered in respect of such Party in an involuntary case under Federal bankruptcy laws as now or hereafter in effect.
(b) If any Event of Default shall have occurred, the non-defaulting Party shall notify the defaulting Party in writing (the “ Notice of Default ”) of such Event of Default. If such Event of Default has not been cured or waived in writing within thirty (30) calendar days of the date of the Notice of Default, the non-defaulting Party may, in its discretion, immediately terminate the provision of WU Services under this Agreement; provided , however , that if the Event of Default is a payment default pursuant to Section 9.3(a)(i) , the period for curing such default shall be reduced to ten (10) calendar days. The foregoing right to terminate is not intended to be exclusive of any other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law.
9.4. Effect of Termination . Except as expressly provided herein, the termination of the provision of WU Services under this Agreement shall not affect any other provisions of this Agreement. Termination of the provision of WU Services under this Agreement shall not limit either Party’s obligations for breach of this Agreement prior to termination or for the payment of amounts due that were incurred prior to such termination.
ARTICLE X
INDEMNIFICATION AND LIMITATION ON LIABILITY
10.1. Indemnification by IPS . (a) IPS agrees to indemnify and hold harmless each WU Group Member from and against any and all Losses and Expenses incurred by such WU Group Member in connection with or arising from:
(i) any breach by IPS of any of its covenants in this Agreement;
 
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(ii) any failure of IPS to perform any of its obligations in this Agreement;
(iii) any breach of any warranty or the inaccuracy of any representation of IPS contained or referred to in this Agreement; or
(iv) the grossly negligent, intentionally wrongful or fraudulent acts of IPS or its employees, agents or representatives.
(b) Limitation on Indemnification by IPS . Subject to Section 10.4(b) , the indemnification by IPS provided for in Section 10.1(a) shall terminate one (1) year after the expiration of the Initial Term (and no claims shall be made by a WU Group Member thereafter); provided , however , indemnification by IPS shall continue as to:
(i) the covenants of IPS set forth in Sections 8.1 , 8.2 and 8.3 , as to all of which no time limitation shall apply;
(ii) any Losses or Expenses of which any WU Group Member has notified IPS in accordance with the requirements of Section 10.4 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 10.1(b) , as to which the obligation of IPS shall continue until the liability of IPS shall have been determined pursuant to this Article X , and IPS shall have reimbursed all WU Group Members for the full amount of such Losses and Expenses for which IPS is liable in accordance with this Article X ;
(iii) claims relating to or arising out of the WU Services provided in the Additional Term or during the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) ; provided , however , that the indemnification provided for in this subsection (iii)  shall terminate one (1) year after the expiration of the Additional Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) , as the case may be;
(iv) claims relating to or arising out of the failure of IPS to pay WU for the WU Services; and
(v) claims related to payment for WU Services as set forth in Section 9.1 .
IPS’ indemnification obligations provided for in this Agreement shall be further limited as follows:
(A) No Consequential Damages . In no event shall IPS or any of its Affiliates be liable for any consequential damages under or in connection with this Agreement, which are hereby excluded by agreement of the Parties regardless of whether IPS or any of its Affiliates has been advised, or could have foreseen, of the possibility of such damages; provided , however , that the foregoing exclusion shall not apply to (1) consequential damages incurred by any WU Group Member as a result of the violation by IPS of the covenants in Section 8.2 , or (2) in the case of consequential damages recovered from a WU Group Member by a third party. The foregoing represents an express allocation of risk between the Parties.
 
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(B) Notwithstanding anything in this Agreement to the contrary, IPS shall in no event be liable or responsible for its failure to carry out any of its obligations under this Agreement, if and to the extent such failure is caused by Force Majeure. If performance by IPS is delayed by more than thirty (30) days by Force Majeure, WU may terminate this Agreement by notice to IPS which termination right, if exercised by WU, shall be WU’s sole remedy for IPS’ failure to provide IPS Services by reason of any Force Majeure. Notwithstanding anything in this paragraph, nothing shall limit any claims by WU unrelated to the Force Majeure event.
(C) Disclaimer of Warranties . Except as expressly set forth in this Agreement, IPS does not make any representation or warranty whatsoever, express or implied, including, but not limited to, any representation or warranty as to IPS Services (including with respect to the nature, quantity or quality thereof) to be provided hereunder.
(D) Notwithstanding anything contained in this Agreement to the contrary, IPS’ aggregate liability for indemnification pursuant to this Section 10.1 shall in no event exceed $5 million.
10.2. Indemnification by WU . (a) WU agrees to indemnify and hold harmless each IPS Group Member from and against any and all Losses and Expenses incurred by such IPS Group Member in connection with or arising from:
(i) any breach by WU of any of its covenants or agreements in this Agreement;
(ii) any failure by WU to perform any of its obligations in this Agreement including its obligations to perform the WU Services in accordance with Schedule 2.1(A) ;
(iii) any breach of any warranty or the inaccuracy of any representation of WU contained or referred to in this Agreement;
(iv) the grossly negligent, intentionally wrongful or fraudulent acts of WU or its employees, agents or representatives;
(v) any Counterfeit Item that is presented to IPS for payment during the Term with respect to which action was required to be taken by WU pursuant to Schedule 2.1(A) and WU failed to take such action; or
(vi) any acts of IPS Clients.
 
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(b) Limitation on Indemnification by WU . Subject to Section 10.4(b) , the indemnification by WU provided for in Section 10.2(a) shall terminate one (1) year after the expiration of the Initial Term (and no claims shall be made by an IPS Group Member thereafter), provided , however , indemnification by WU shall continue as to:
(i) the covenants of WU set forth in Sections 8.1 , 8.2 , and 8.3 , as to all of which no time limitation shall apply;
(ii) any Losses or Expenses of which IPS has notified WU in accordance with the requirements of Section 10.4 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 10.2(b) , as to which the obligation of WU shall continue until the liability of WU shall have been determined pursuant to this Article X , and WU shall have reimbursed all IPS Group Members for the full amount of such Losses and Expenses for which WU is liable in accordance with this Article X ; and
(iii) claims relating to or arising out of the WU Services provided in the Additional Term or during the term of any extension of the term of this Agreement pursuant to Section 9.1 (d) ; provided , however , that the indemnification provided for in this subsection (iii)  shall terminate one (1) year after the expiration of the Additional Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (d ), as the case may be.
WU’s indemnification obligations provided for in this Agreement shall be further limited as follows:
(A) Notwithstanding anything in this Agreement to the contrary, WU shall in no event be liable or responsible for its failure to carry out any of its obligations under this Agreement, if and to the extent such failure is caused by Force Majeure. If performance by WU is delayed by more than thirty (30) days by Force Majeure, IPS may terminate this Agreement by notice to WU, which termination right, if exercised by IPS, shall be IPS’ sole remedy for WU’s failure to provide WU Services by reason of any Force Majeure. Notwithstanding anything in this paragraph, nothing shall limit any claims by IPS unrelated to the Force Majeure event.
(B) Disclaimer of Warranties . Except as expressly set forth in this Agreement, WU does not make any representation or warranty whatsoever, express or implied, including, but not limited to, any representation or warranty as to WU Services (including with respect to the nature, quantity or quality thereof) to be provided hereunder.
(C) No Consequential Damages . In no event shall WU or any of its Affiliates be liable for any consequential damages under or in connection with this Agreement, which are hereby excluded by agreement of the Parties regardless of whether WU or any of its Affiliates has been advised, or could have foreseen, of the possibility of such damages; provided , however , that the foregoing
 
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exclusion shall not apply (1) to consequential damages incurred by any IPS Group Member as a result of violations by WU of the covenants in Section 8.2 , or (2) in the case of consequential damages recovered from an IPS Group Member by a third party. The foregoing represents an express allocation of risk between the Parties.
(D) Counterfeit Items . In the case of any Counterfeit Item which is presented to IPS for payment during the Term with respect to which either no action was required to be taken by WU pursuant to Schedule 2.1(A) or all action that was required to be taken by WU pursuant to S chedule 2.1(A) was taken, WU will have no obligation to indemnify and hold harmless each IPS Group Member and any and all Losses and Expenses incurred in connection with or arising from such Counterfeit Item shall be the sole responsibility of IPS.
(E) Notwithstanding anything contained in this Agreement to the contrary and except for the indemnification obligations of WU set forth in Section 10.2(a)(v) , WU’s annual aggregate liability for indemnification pursuant to this Section 10.2 shall in no event exceed $5 million, provided , however , that such limit shall not apply to:
(i) Losses and Expenses related to a failure of either WU or an IPS Client to remit proceeds from the sale of Money Orders to IPS .
(ii) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a Counterfeit Item when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set in the User Manuals;
(iii) Losses and Expenses caused by WU’s failure to instruct IPS to return (including all such failures caused by IPS’s failure to enter stop payment orders in accordance with User Manuals), by the applicable deadline specified in the User Manuals, an Item on which a stop payment has been requested in accordance the procedure set forth in the User Manuals, when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth in the User Manuals;
(iv) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a payment instrument that does not bear a serial number assigned to an IPS Client or does bear a serial number assigned to an IPS Client but its face amount does not correspond to the issue amount reported by the IPS Client when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth on in the User Manuals; or
(v) Losses and Expenses caused by WU’s failure to instruct IPS to return, by the applicable deadline specified in the User Manuals, a
 
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payment instrument or Item that bears the same valid serial number and face amount as an Item (or Counterfeit Item) previously paid when such failure to make a timely return was not caused by IPS’s failure to follow the procedure set forth in the User Manuals .
(vi) Regulatory fines, assessment and penalties arising from WU’s non-compliance with the terms and conditions of this Agreement.
For purposes of subparagraphs (i) through (iv) above, the terms “Losses and Expenses” shall not include losses or expenses incurred by IPS that are related to adjustments to the average investable balance of an IPS Client that will be required when the items described above are properly recorded or adjusted as the case may be.
(c) In the event that IPS makes a claim against WU for indemnification under this Agreement, IPS shall assist and cooperate fully with WU, in all such lawful manners as WU shall request, in asserting in the name of WU any claims or rights against any third party or any defenses to claims asserted by third parties that IPS may have, or have the right to assert, including, without limitation, any rights under any agreement with IPS’ depository banks, the IPS Clients or other third party, by law or in equity. Such assistance and cooperation shall include, but not be limited to, the assignment of claims, rights or defenses held by IPS, but excludes the right to assert or defend any action in the name of IPS. As part of such assistance, IPS will make available IPS employees knowledgeable with respect to such claim or defense. WU shall bear any material costs and expenses incurred by IPS to third parties, such as IPS’ out-of-pocket costs and outside attorneys’ fees, in providing such assistance and cooperation, but WU shall not be required to reimburse IPS for the costs or time of IPS employees or related overhead. Upon reasonable request, WU shall provide IPS with non-confidential information regarding the status of any such actions.
(d) In the event that WU is required by law, regulation or court order to bring a formal legal action against an IPS Client, an IPS depository bank or other third party, under IPS’ name (whether as a claimant or co-claimant), then WU and IPS shall utilize the following procedures:
(A) WU will notify IPS of its intent to bring a formal legal action against the third party, and will include in such notification a copy of the law, regulation, court order or written opinion of outside counsel on letterhead, demonstrating that IPS is a necessary party to the legal proceedings contemplated.
(B) IPS shall determine within ten (10) Business Days of the receipt of the notice and documentation whether it will permit WU to proceed in IPS’ name. If IPS will permit WU to proceed in IPS’ name, WU shall proceed with the proposed formal legal action and/or any other action WU has the right to pursue pursuant to Section 10.2(c) . If IPS will not permit WU to proceed in IPS’ name, (1) IPS shall promptly reimburse WU for the amount of the claim that is attributable to the actions or failures of the third party (and that WU has previously paid to IPS), and (2) IPS shall have no further right to seek
 
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indemnification from WU for such that portion of such claim under this Agreement. In the event IPS and WU do not agree as to the amount of the claim attributable to the actions or failures of the third party, such dispute will be resolved in accordance with Section 11.13 .
(C) In the event any formal proceedings are commenced hereunder under IPS’ name, WU will update IPS regularly on the status of such proceedings and provide information as reasonably requested by IPS regarding such proceedings.
10.3. Specific Performance . (a) I n the event IPS or any of its Affiliates violates any of its obligations under Section 8.2 , WU may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. IPS acknowledges that a violation of Section 8.2 may cause WU irreparable harm which may not be adequately compensated for by money damages. IPS therefore agrees that in the event of any actual or threatened violation of Section 8.2 , WU shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against IPS or such Affiliate of IPS to prevent any violations of Section 8.2 , without the necessity of posting a bond.
(b) In the event WU or any of its Affiliates violates any of its obligations under Section 8.2 , IPS may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate. WU acknowledges that a violation of Section 8.2 may cause IPS irreparable harm which may not be adequately compensated for by money damages. WU therefore agrees that in the event of any actual or threatened violation of Section 8.2 , IPS shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against WU or such Affiliate of WU to prevent any violations of Section 8.2 , without the necessity of posting a bond.
(c) The prevailing Party in any action commenced under this Section 10.3 shall also be entitled to receive reasonable attorneys’ fees and court costs.
10.4. Notice of Claims .
(a) General Procedures . The following procedures shall apply to any claim for indemnification under this Agreement:
(i) Any Person (the “ Indemnified Party ”) seeking indemnification hereunder shall give to the Party obligated to provide indemnification to such Indemnified Party (the “ Indemnifying Party ”) a notice (a “ Claim Notice ”) describing in reasonable detail the facts giving rise to any claim for indemnification hereunder and shall include in such Claim Notice (if then known) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based; provided , that a Claim Notice in respect of any action at law or suit in equity by or against a third Person as to which indemnification will be sought shall be
 
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given promptly after the action or suit is commenced; provided further that failure to give such notice shall not relieve the Indemnifying Party of its obligations hereunder except to the extent it shall have been prejudiced by such failure.
(ii) In calculating any Losses or Expenses (i) there shall be deducted (x) any insurance recovery in respect thereof (and no right of subrogation shall accrue hereunder to any insurer) and (y) the amount of any Tax benefit to the Indemnified Party (or any of its Affiliates) with respect to such Losses or Expenses (after giving effect to the tax effect of receipt of the indemnification payments), and (ii) there shall be added the amount of any Tax detriment to the Indemnified Party (or any of its Affiliates) with respect to such Losses or Expenses (after giving effect to the tax effect of receipt of the indemnification payments).
(iii) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article X shall be determined (i) by the written agreement between the Indemnified Party and the Indemnifying Party; (ii) pursuant to Section 11.13 ; or (iii) by any other means to which the Indemnified Party and the Indemnifying Party shall agree. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of Losses and Expenses suffered by it.
(b) Limitation on Notice Period Relating to WU Services . No cause of action, dispute or claim for indemnification relating to the WU Services may be asserted or made against any Party on a date later than: (i) two (2) years after the date in which facts giving rise to such cause of action, dispute or claim are discovered or, with the exercise of due diligence, should reasonably have been discovered, or if such event for which indemnification is claimed is an action or proceeding brought against the Indemnified Party, the end of the related notification period provided in Section 10.4(a) or (ii) one year after the earlier of the termination of the provision of WU Services under this Agreement or the expiration of the Additional Term.
10.5. Third Person Claims . The following procedures shall apply to any claim for indemnification under this Agreement:
(a) Subject to Section 10.5(b) , the Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any third Person claim, action or suit against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnifying Party hereunder, and in any such case the Indemnifying Party shall cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnified Party in connection therewith; provided , that the Indemnifying Party may participate, through counsel chosen by it and at its own expense, in the defense of any such claim, action or suit as to which the Indemnified Party has so elected to conduct and control the defense thereof; and provided , further , that the Indemnified Party shall not, without the written consent of the Indemnifying
 
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Party (which written consent shall not be unreasonably withheld), pay, compromise or settle any such claim, action or suit, except that no such consent shall be required if, following a written request from the Indemnified Party, the Indemnifying Party shall fail, within fourteen (14) days after the making of such request, to acknowledge and agree in writing that, if such claim, action or suit shall be adversely determined, such Indemnifying Party has an obligation to provide indemnification hereunder to such Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay, settle or compromise any such claim, action or suit without such consent, provided that in such event the Indemnified Party shall waive any right to indemnity therefor hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any Indemnified Party is solely for money damages, then the Indemnifying Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any such third Person claim, action or suit against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnifying Party hereunder if the Indemnifying Party has acknowledged and agreed in writing that, if the same is adversely determined, the Indemnifying Party has an obligation to provide indemnification to the Indemnified Party in respect thereof, and in any such case the Indemnified Party shall cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnifying Party in connection therewith; provided , that the Indemnified Party may participate, through counsel chosen by it and at its own expense, in the defense of any such claim, action or suit as to which the Indemnifying Party has so elected to conduct and control the defense thereof. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay, settle or compromise any such claim, action or suit, provided that in such event the Indemnified Party shall waive any right to indemnity therefor hereunder unless the Indemnified Party shall have sought the consent of the Indemnifying Party to such payment, settlement or compromise and such consent was unreasonably withheld, in which event no claim for indemnity therefor hereunder shall be waived.
ARTICLE XI
GENERAL PROVISIONS
11.1. Survival of Obligations . All representations, warranties, covenants and obligations contained in this Agreement shall survive the consummation of the transactions contemplated by this Agreement.
11.2. No Public Announcement . Neither WU nor IPS shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any stock exchange, in which case the other Party shall be advised and the Parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and Securities and Exchange Commission disclosure obligations.
 
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11.3. Notices . All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile, when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third Business Day after mailing, or (iv) if sent by reputable overnight courier services, when received, and shall be addressed as follows:
If to WU, to:
Western Union Financial Services, Inc.
12510 East Belford Avenue
Englewood, Colorado 80112
Telephone: (720) 332-3190
Facsimile: (720) 332-0501
Attention: General Manager- Retail Money Order
with a copy to:
General Counsel
If to IPS, to:
Integrated Payment Systems Inc.
12500 East Belford Avenue, Mail Stop M18U
Englewood, Colorado 80112
Telephone: (720) 332-3101
Facsimile: (720) 332-0096
Attention: President
with a copy to:
General Counsel
or to such other address as such Party may indicate by a notice delivered to the other Party.
11.4. Successors and Assigns; Third Party Beneficiaries . (a) The rights and obligations of either Party under this Agreement shall not be assigned by such Party without the written consent of the other Party.
(b) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Except for Article X , which is intended to benefit, and to be enforceable by, the parties specified therein, nothing in this
 
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Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the Parties and their respective successors and assigns permitted by this Section 11.4 any right, remedy or claim under or by reason of this Agreement.
11.5. Access to Records after Closing Date . For a period of eight (8) years after the expiration or termination of the Term or the expiration of the term of any extension of the term of this Agreement pursuant to Section 9.1 (c)  or Section 9.1(d) , as applicable, each Party and its representatives shall have reasonable access to all of the books and records related to this Agreement to the extent necessary for such Party to meet its regulatory and contractual responsibilities. Such access shall be afforded to such Party and its Affiliates upon receipt of reasonable advance notice and during normal business hours. The requesting Party shall be solely responsible for any costs and expenses incurred by it pursuant to this Section 11.5 in seeking access to books and records in the control of the other Party. The non-requesting Party shall be solely responsible for any costs and expenses incurred by it in complying with this Section 11.5 . If either Party or any of its Affiliates shall desire to dispose of any of such books and records prior to the expiration of such eight-year period, such Party shall, prior to such disposition, give the other Party a reasonable opportunity, at the non-disposing Party’s expense, to segregate and remove such books and records as the non-disposing Party may select.
11.6. Entire Agreement; Amendments . This Agreement and the Exhibits and Schedules referred to herein and the documents delivered pursuant hereto contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or letters of intent between the Parties. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties.
11.7. Interpretation . Article titles and headings to Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
11.8. Waivers . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement only if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
11.9. Expenses . Each Party will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and accountants.
 
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11.10. Severability . Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
11.11. Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be considered an original instrument, but all of which together shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed and delivered to each of the Parties.
11.12. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws (without regard to the conflicts of law provisions) of the State of New York.
11.13. Dispute Resolution . IPS and WU agree to utilize the following procedures to resolve any disputes between them that arise under this Agreement (other than those governed by Section 10.2(d) ):
(a) Level One . If IPS identifies an issue, or issues, that requires resolution, it will give the Account Manager written notice thereof; and if WU identifies an issue, or issues, that require resolution, it will give IPS written notice thereof. The Account Manager and an IPS designee will then negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously as feasible. If they are unable to resolve the issue(s) within ten (10) Business Days of such notice, either may state in writing to the other that they will not be able to resolve the remaining issue(s) through continued negotiation. Promptly thereafter, they will refer the issue(s) to the IPS executive with management responsibility for the WU relationship and the executive of WU with management responsibility for the IPS relationship (collectively, the “ Senior Executives” ) and will each provide to the Senior Executives a written statement describing in detail their respective positions related to the issue(s) (the “ Issue Statements” ).
(b) Level Two . Promptly after receiving the Issue Statements, the Senior Executives will negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously as feasible. If the Senior Executives are unable to resolve the issue(s) within ten (10) Business Days of receipt of such Issue Statements, either Senior Executive may state in writing to the other that they will not be able to resolve the remaining issue(s) through continued negotiation. Promptly thereafter, each Senior Executive will refer the issue(s) to a senior level executive from a separate business unit, division, subsidiary or Affiliate of their respective Party (the “ Distant Executive ”) and each Party’s respective management team will prepare any revisions to their respective Issue Statements. The Issue Statements, as revised, will be submitted to the Distant Executives.
(c) Level Three . Promptly after receiving the Issue Statements, the Distant Executives will negotiate in good faith on a regular basis to resolve the issue(s) as expeditiously
 
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as feasible. Thereafter, the Distant Executives will submit a joint written recommendation for any issue(s) the Distant Executives agreed upon and separate written recommendations for any issue(s) the Distant Executives disagreed upon or which remain unresolved. IPS and WU agree to be bound by such joint written recommendation. In the event, the Distant Executives are unable to resolve the dispute, then, at the request of either Party, the dispute shall be settled by binding arbitration by a single arbitrator. Such arbitration shall occur in Denver, Colorado, and shall be administered by the American Arbitration Association under its Commercial Arbitration Rules. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
(d) Continuity of WU Services . WU acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of IPS. Accordingly, in the event of a dispute between IPS and WU, WU shall continue to so perform its obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with the provisions hereof.
IN WITNESS WHEREOF , the Parties have caused this Agreement to be executed the day and year first above written.

INTEGRATED PAYMENT SYSTEMS INC.	
		
By:	 	 	
Name:	 		
Title:	 		
	
WESTERN UNION FINANCIAL SERVICES, INC.	
		
By:	 	 	
Name:	 		
Title:	 		
 
28

[Schedules Intentionally Omitted]
 
29
 
Exhibit 10.6
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1. Purposes . The purposes of The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”) are (i) to advance the interests of The Western Union Company (the “Company”) by attracting and retaining high caliber employees, and other key individuals who perform services for the Company, a Subsidiary or an Affiliate, (ii) to align the interests of the Company’s stockholders and recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success and (iii) to motivate award recipients to act in the long-term best interests of the Company and its stockholders. 
1.2. Definitions .
“ Affiliate ” shall mean any entity of which the Company owns or controls, directly or indirectly, less than 50% but at least 20% of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Agreement ” shall mean the written agreement evidencing an award hereunder between the Company and the recipient of such award and shall include any terms and conditions that may apply to such award.
“ Board ” shall mean the Board of Directors of the Company.
“ Bonus Stock ” shall mean shares of Common Stock that are not subject to a Restriction Period or Performance Measures.
“ Bonus Stock Award ” shall mean an award of Bonus Stock.
“ Cause ” shall mean the willful and continued failure to substantially perform the duties assigned by the Company, a Subsidiary or an Affiliate (other than a failure resulting from the award recipient’s Disability), the willful engaging in conduct which is demonstrably injurious to the Company, a Subsidiary or an Affiliate (monetarily or otherwise), any act of dishonesty, the commission of a felony, the continued failure to meet performance standards, excessive absenteeism, or a significant violation of any statutory or common law duty of loyalty to the Company, a Subsidiary or an Affiliate.
“ Change in Control ” shall mean:
(a) the acquisition by any individual, entity or group (a “ Person ”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of either (i) the then outstanding shares of common stock of the Company (the “ Outstanding Common Stock ”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Voting Securities ”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly

from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this definition; provided further, that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 25% or more of the Outstanding Common Stock or 25% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(b) The cessation of individuals, who constitute the Board (the “ Incumbent Board ”) as of the date this Plan is adopted by the Board, to constitute at least a majority of such Incumbent Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(c) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “ Corporate Transaction ”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the
 
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members of the board of directors of the corporation resulting from such Corporate Transaction; or
(d) the consummation of a plan of complete liquidation or dissolution of the Company.
“ Code ” shall mean the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“ Committee ” shall mean the Compensation and Benefits Committee of the Board or its delegate, or any other committee the Board may designate to administer this Plan.
“ Common Stock ” shall mean the common stock of the Company.
“ Company ” has the meaning specified in Section 1.1.
“ Corporate Transaction ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Disability ” shall mean the inability of the holder of an award to perform substantially such holder’s duties and responsibilities due to a physical or mental condition (i) that would entitle such holder to benefits under the Company’s Long-Term Disability Plan (or similar disability plan of the Company, a Subsidiary or an Affiliate in which such holder is a participant) or if the Committee deems it relevant, any disability rights provided as a matter of local law or (ii) if such holder is not eligible for long-term disability benefits under any plan sponsored by the Company, a Subsidiary, or an Affiliate, that would, as determined by the Committee, entitle such holder to benefits under the Company’s Long-Term Disability Plan if such holder were eligible therefor. In the case of Incentive Stock Options, the term “Disability” shall have the same meaning as “Permanent and Total Disability” as such term is defined in this Section 1.2.
“ Employee Matters Agreement ” shall mean the agreement entered into by the Company and First Data as of [                      ].
“ Exchange Act ” shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Fair Market Value ” shall mean the average of the high and low transaction prices of a share of Common Stock as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.
“ Family Entity ” shall mean a trust in which one or more Family Members have more than fifty percent of the beneficial interest, a foundation in which the award holder and/or one or more Family Members control the management of assets and any other entity in which the award holder and/or one or more Family Members own more than fifty percent of the voting interests.
 
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“ Family Member ” shall mean an award holder’s spouse, parent, child, stepchild, grandchild, sibling, mother or father-in-law, son or daughter-in-law, stepparent, grandparent, former spouse, niece, nephew or brother or sister-in-law, including adoptive relationships, or any person sharing the award holder’s household (other than a tenant or employee).
“ First Data ” shall mean First Data Corporation, including any subsidiary or affiliate thereof. A subsidiary of First Data Corporation shall mean any entity of which First Data Corporation owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power). An affiliate of First Data Corporation shall mean any entity of which First Data Corporation owns or controls, directly or indirectly, less than 50% of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Incentive Stock Option ” shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option.
“ Incumbent Board ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Mature Shares ” shall mean previously-acquired shares of Common Stock for which the holder thereof has good title, free and clear of all liens and encumbrances and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.
“ Nonqualified Stock Option ” shall mean an option (including a Purchased Stock Option) to purchase shares of Common Stock which is not an Incentive Stock Option.
“ Outstanding Common Stock ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Outstanding Voting Securities ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Performance Grant ” shall mean an award conferring a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive shares of Common Stock, Restricted Stock, Restricted Stock Units, cash, or any combination thereof, as determined by the Committee or as evidenced in the Agreement relating to such Performance Grant.
“ Performance Measures ” shall mean the criteria and objectives that may be established by the Committee, which must be satisfied or met (i) as a condition to the exercisability of all or a portion of a Stock Option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the applicable Restriction Period or Performance Period as a condition to the holder’s receipt, in the case of a Stock Award, of the shares of Common Stock subject to such award and/or of payment with respect to such award, or, in the case of a Performance Grant, of the shares of Common Stock, Restricted Stock or Restricted Stock Units subject to such award and/or of payment with respect to such award. Such criteria and objectives may include one or more of the following: the attainment by a share of Common Stock of a specified value within or for a
 
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specified period of time, earnings per share, earnings before interest expense and taxes, return to stockholders (including dividends), return on equity, earnings, revenues, market share, cash flow or cost reduction goals, operating profit, pretax return on total capital, economic value added, or any combination of the foregoing. Such criteria and objectives may relate to results obtained by the individual, the Company, a Subsidiary, an Affiliate, or any business unit or division thereof, or may apply to results obtained relative to a specific industry or a specific index. If the Committee desires that compensation payable pursuant to any award subject to Performance Measures be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the Performance Measures (i) shall be established by the Committee no later than the end of the first quarter of the Performance Period or Restriction Period, as applicable (or such other time designated by the United States Internal Revenue Service) and (ii) shall satisfy all other applicable requirements imposed under United States Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such Performance Measures be stated in terms of an objective formula or standard.
“ Performance Period ” shall mean any period designated by the Committee or specified in an Agreement during which the Performance Measures applicable to a Performance Grant shall be measured.
“ Permanent and Total Disability ” shall have the meaning set forth in Section 22(e)(3) of the Code or any successor thereto.
“ Person ” shall have the meaning set forth in the definition of “Change in Control” set forth in this Section 1.2.
“ Plan ” shall have the meaning set forth in Section 1.1.
“ Plan Share Limit ” shall have the meaning set forth in Section 1.5.
“ Post-Termination Exercise Period ” shall mean the period specified in or pursuant to Section 2.3(a), Section 2.3(b), Section 2.3(d) or Section 2.3(e) following termination of employment with or service to the Company during which a Stock Option or SAR may be exercised.
“ Purchased Stock Option ” shall mean a Nonqualified Stock Option that is sold to eligible individuals at a price determined by the Committee, has an exercise price equal to the Fair Market Value of the Common Stock subject to such Stock Option on the date such Stock Option is sold to the eligible individual, and contains such additional terms and conditions as the Committee deems appropriate.
“ Related Employment ” shall mean the employment or performance of services by an individual for an employer that is neither the Company nor a Subsidiary nor an Affiliate, provided that (i) such employment or performance of services is undertaken by the individual at the request of the Company, a Subsidiary or an Affiliate, (ii) immediately prior to undertaking such employment or performance of services, the individual was employed by or performing service for the Company, a Subsidiary, or an Affiliate or was engaged in Related Employment and (iii) such employment or performance of services is in the best interests of the Company as determined by the Committee and is recognized by the Committee, in its discretion, as Related
 
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Employment. The death or Disability of an individual or his or her involuntary termination of employment during a period of Related Employment shall be treated, for purposes of this Plan, as if the death, Disability or involuntary termination had occurred while the individual was employed by or performing services for the Company, a Subsidiary or an Affiliate.
“ Replacement and Substitute Award ” shall mean a Stock Option, Restricted Stock Award, or Restricted Stock Unit Award granted in connection with the spin-off of the Company to certain current and former employees and directors of First Data pursuant to the terms of the Employee Matters Agreement.
“ Restricted Stock ” shall mean shares of Common Stock which are subject to a Restriction Period.
“ Restricted Stock Award ” shall mean an award of Restricted Stock under this Plan.
“ Restricted Stock Unit ” shall mean the right to receive one share of Common Stock or the Fair Market Value thereof in cash, which shall be contingent upon the expiration of a specified Restriction Period and subject to such additional restrictions as may be contained in the Agreement relating thereto. The Committee shall specify in the Agreement whether a Restricted Stock Unit Award shall be payable in Common Stock, cash, or any combination thereof.
“ Restricted Stock Unit Award ” shall mean an award of Restricted Stock Units under this Plan.
“ Restriction Period ” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award or (ii) the vesting conditions applicable to a Restricted Stock Unit Award shall remain in effect.
“ Retirement ” shall mean an employee’s termination of employment with or service to the Company by reason of retirement on or after (i) age 65, or (ii) age 55, provided the employee has completed at least 10 Years of Service.
“ SAR ” shall mean the right to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.
“ Stock Award ” shall mean a Restricted Stock Award, a Restricted Stock Unit Award, or a Bonus Stock Award.
“ Stock Option ” shall mean a Nonqualified Stock Option or an Incentive Stock Option.
“ Subsidiary ” shall mean any entity of which the Company owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Tax Date ” shall have the meaning set forth in Section 5.5.
 
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“ Ten Percent Holder ” shall have the meaning set forth in Section 2.1(a).
“ Years of Service ” shall mean (i) the number of years of service credited to an individual under the Company’s Incentive Savings Plan (“ISP”) or (ii) if the individual is not eligible to participate in the ISP, the number of such individual’s years of service, computed as if the individual had been eligible to participate in the ISP while employed by the Company or a Subsidiary, provided, however, that unless otherwise provided in the Agreement, the computed number of years of service shall not include any period of an individual’s employment with an Affiliate.
1.3. Administration . This Plan shall be administered by the Committee. The Committee may grant any one or a combination of the following awards under this Plan to eligible persons: (i) Stock Options (in the form of Nonqualified Stock Options or Incentive Stock Options), (ii) SARs, (iii) Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v) Bonus Stock Awards, and (vi) Performance Grants.
The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award.
The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding Stock Options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding Stock Award shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Performance Grant shall lapse and (iv) the Performance Measures applicable to any outstanding award (if any) shall be deemed to be satisfied at the maximum or any other level.
The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish, amend and revoke rules and regulations it deems necessary or desirable for the administration of this Plan, adopt sub-plans applicable to specific Subsidiaries, Affiliates or locations and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities to the extent permitted under local law. The Committee may require, as a condition to the issuance, exercise, settlement or acceptance of an award under this Plan, that the award recipient agree to mandatory arbitration to settle any disputes relating to such award. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive.
To the extent permitted by applicable law, the Committee may delegate some or all of its power and authority hereunder to another entity or committee, a member of the Board, or one or more officers of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority to another entity or committee, a member of the Board, or one or more officers of the Company with regard to (i) the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding, (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions
 
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concerning the timing, pricing or amount of an award to such an officer or other person, and (iii) any decision regarding the impact of a Change in Control on awards issued under the Plan. In exercising its power and authority hereunder with respect to Replacement and Substitute Awards held by employees of First Data, the Committee shall, in good faith, cooperate with and give due regard to any information provided by First Data.
No member of the Committee, and no entity, committee, member of the Board or officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Committee and such entities, committees, members of the Board or officers shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law.
A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.
1.4. Eligibility . All employees of the Company, Subsidiaries and Affiliates and other individuals who perform services for the Company, a Subsidiary or an Affiliate are eligible to receive awards under this Plan, as the Committee in its sole discretion may select from time to time. In connection with the spin-off of the Company, certain current and former employees and directors of First Data will receive Replacement and Substitute Awards. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time.
1.5. Shares Available .
(a) Plan Share Limit . Subject to adjustment as provided in Section 5.7, [                      ] shares of Common Stock shall be available under this Plan (the “Plan Share Limit”).
(b) Deductions . Shares of Common Stock subject to Stock Options and SARs shall apply against and reduce the Plan Share Limit as one share for every one share subject thereto. Shares of Common Stock subject to Stock Awards and Performance Grants shall apply against and reduce the Plan Share Limit as [three] shares for every one share subject thereto or payable pursuant thereto. Dividend equivalents paid with respect to awards shall not apply against or reduce the Plan Share Limit.
(c) Increases . The Plan Share Limit shall be increased by shares of Common Stock subject to an outstanding award that are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of Common Stock to pay all or a portion of the exercise price of an award, if any, or to satisfy all or a portion of the tax withholding obligations relating to an award. Increases in the Plan Share Limit by virtue of this Section 1.5(c) shall be made in a manner that is consistent with the Plan Share Limit deductions made pursuant to Section 1.5(b). No increases shall be made in the Plan Share Limit by reason of the exercise of SARs.
 
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(d) Performance-based Compensation . To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code, the maximum aggregate number of shares of Common Stock with respect to which Stock Options, SARs, Stock Awards or Performance Grants may be issued to any individual during a calendar year shall be one-half of one percent of the total number of outstanding shares of Common Stock of the Company as of the preceding December 31 st . The maximum amount of cash payable during a calendar year to any person in connection with a Performance Grant shall be $8,000,000.
(e) Source of Shares . Shares of Common Stock shall be made available from authorized but unissued shares, treasury shares, reacquired shares, or any combination thereof. 
1.6 Employment . Unless otherwise expressly provided herein, references to “employment” with the Company or “employment with or service to the Company” shall mean the employment with or service to the Company, a Subsidiary or an Affiliate, including transfers of employment between the Company, a Subsidiary and an Affiliate, approved leaves of absence, and Related Employment.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1. Stock Options . The Committee may, in its discretion, grant Stock Options to such eligible persons as may be selected by the Committee. An Incentive Stock Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option shall be granted within ten years of the date this Plan is adopted by the Board. To the extent the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or subsidiary as defined in Section 424 of the Code) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options.
Stock Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price . The number of shares of Common Stock subject to a Stock Option shall be determined by the Committee. The purchase price per share of Common Stock purchasable upon exercise of a Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such Stock Option; provided, however, that if an Incentive Stock Option shall be granted to any person who, at the time such Incentive Stock Option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424 of the Code) (a “ Ten Percent Holder ”), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.
 
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(b) Option Period and Exercisability . The period during which a Stock Option may be exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such Incentive Stock Option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of a Stock Option or to the exercisability of all or a portion of a Stock Option. The Committee shall determine whether a Stock Option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable Stock Option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.
(c) Method of Exercise . A Stock Option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Mature Shares having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, or (D) by a combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the Stock Option, and (ii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate or other indicia of ownership representing Common Stock shall be delivered until the full purchase price therefor, and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).
(d) Minimum Vesting Period . Unless otherwise provided in the Agreement, no Stock Option may become exercisable until six months from the date such Stock Option was granted.
(e) Repricing and Discounting . Subject to Section 5.7, the repricing or discounting of Stock Options is expressly disallowed under this Plan.
2.2. Stock Appreciation Rights . The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee.
SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price . The number of SARs subject to an award shall be determined by the Committee. The base price of an SAR shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date such SAR is granted.
(b) Exercise Period and Exercisability . The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall
 
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be determined by the Committee. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates or other indicia of ownership representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR and shall have rights as a stockholder of the Company in accordance with Section 5.10.
(c) Method of Exercise . An SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.
(d) Minimum Vesting Period . Unless otherwise provided in the Agreement, no SAR may become exercisable until six months from the date such SAR was granted.
(e) Repricing and Discounting . Subject to Section 5.7, the repricing or discounting of SARs is expressly disallowed under this Plan.
2.3. Termination of Employment or Service .
(a) Disability . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of Disability, each Stock Option and SAR held by such holder shall become fully vested and exercisable and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is one year after the effective date of such holder’s termination of employment or service, or if earlier, the expiration date of the term of such Stock Option or SAR.
(b) Retirement . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of Retirement, each Stock Option and SAR held by such holder shall continue to vest in accordance with its terms, and to the extent vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is four years after the effective date of such holder’s termination of employment or service, or if earlier, the expiration date of the term of such Stock Option or SAR.
(c) Death . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of death, each Stock Option and SAR held by such holder shall become fully vested and exercisable and may thereafter be exercised by such holder’s executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of such Stock Option or SAR.
 
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(d) Involuntary Termination Without Cause . Unless otherwise specified in the Agreement, and except as provided in Section 5.8, if the employment with or service to the Company of the holder of a Stock Option or SAR is terminated by the Company, a Subsidiary or an Affiliate without Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of such Stock Option or SAR.
(e) Other Termination . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause, or termination for Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following such holder’s termination of employment or service. If the New York Stock Exchange is closed on such date, then such Stock Option or SAR shall be forfeited and shall be canceled by the Company effective with the close of the New York Stock Exchange on the next following day in which the New York Stock Exchange is open. If the employment with or service to the Company of the holder of a Stock Option or SAR is terminated for Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of such holder’s termination of employment or service. If the New York Stock Exchange is closed at the time of such holder’s termination of employment, then such Stock Option or SAR shall be forfeited at the time such holder’s employment is terminated and shall be canceled by the Company.
(f) Death Following Termination of Employment or Service . Unless otherwise specified in the Agreement, if the holder of a Stock Option or SAR dies during the applicable Post-Termination Exercise Period, each Stock Option and SAR held by such holder shall be exercisable only to the extent that such Stock Option or SAR is exercisable on the date of such holder’s death and may thereafter be exercised by the holder’s executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of such Stock Option or SAR.
III. STOCK AWARDS
3.1. Stock Awards . The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to the Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award, or a Bonus Stock Award.
3.2. Terms of Stock Awards . Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms . The number of shares of Common Stock subject to a Stock Award and the Performance Measures (if any) and the Restriction Period applicable to a Restricted Stock Award or a Restricted Stock Unit Award shall be determined by the Committee.
 
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(b) Vesting and Forfeiture . The Agreement relating to a Restricted Stock Award or Restricted Stock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award, in the case of a Restricted Stock Award, or for the vesting of the Restricted Stock Unit Award itself, in the case of Restricted Stock Unit Award, (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment of or service to the Company during the specified Restriction Period, and for the forfeiture of all or a portion of the shares of Common Stock subject to such award in the case of a Restricted Stock Award, or for the forfeiture of the Restricted Stock Unit Award itself, in the case of a Restricted Stock Unit Award, (x) if specified Performance Measures are not satisfied or met during the specified Restriction Period or (y) if the holder of such award does not remain continuously in the employment of or service to the Company during the specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or Restriction Periods.
(c) Share Certificates/Indicia of Ownership . During the Restriction Period, a certificate or certificates or other indicia of ownership representing a Restricted Stock Award may be registered in the holder’s name or a nominee name at the discretion of the Company and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented thereby is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. As determined by the Committee, all certificates or other indicia of ownership registered in the holder’s name shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of any applicable Performance Measures), or upon the grant of a Bonus Stock Award, in each case subject to the Company’s right to require payment of any taxes in accordance with Section 5.5, a certificate or certificates evidencing ownership, or such other indicia of ownership as determined by the Committee, of the requisite number of shares of Common Stock shall be delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards . Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the Committee’s right to cause such Award to be cancelled pursuant to an adjustment under Section 5.7, the holder of such award shall have all rights as a stockholder of the Company, including voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made. Notwithstanding the immediately preceding sentence, in the Committee’s sole discretion, regular cash dividends issued
 
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with respect to Common Stock subject to a Restricted Stock Award may be paid to the holder notwithstanding the restrictions applicable to the Common Stock with respect to which the cash dividends were made.
(e) Rights and Provisions Applicable to Restricted Stock Unit Awards . The Agreement relating to a Restricted Stock Unit Award shall specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Restricted Stock Unit Award, the holder thereof shall not have any rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award, except to the extent that the Committee, in its sole discretion, may grant dividend equivalents on Restricted Stock Unit Awards which are settled in shares of Common Stock. No shares of Common Stock and no certificates or other indicia of ownership representing shares of Common Stock that are subject to a Restricted Stock Unit Award shall be issued upon the grant of a Restricted Stock Unit Award. Instead, shares of Common Stock subject to Restricted Stock Unit Awards and the certificates or other indicia of ownership representing such shares of Common Stock shall only be distributed at the time of settlement of such Restricted Stock Unit Awards in accordance with the terms and conditions of this Plan and the Agreement relating to such Restricted Stock Unit Award.
(f) Minimum Restriction Period . Unless otherwise provided in the Agreement, the minimum Restriction Period shall be one year.
3.3. Termination of Employment or Service .
(a) Disability and Death . Unless otherwise set forth in the Agreement relating to a Stock Award, if the employment with or service to the Company of the holder of such award terminates by reason of Disability or death, the Restriction Period shall terminate as of the effective date of such holder’s termination of employment or service and all Performance Measures applicable to such award shall be deemed to have been satisfied at the maximum level.
(b) Other Termination . Unless otherwise set forth in the Agreement relating to a Stock Award, and except as provided in Section 5.8, if the employment with or service to the Company of the holder of a Stock Award terminates for any reason other than Disability or death, the portion of such award which is subject to a Restriction Period on the effective date of such holder’s termination of employment or service shall be immediately forfeited by such holder and canceled by the Company.
IV. PERFORMANCE GRANTS
4.1. Performance Grants . The Committee may, in its discretion, make Performance Grants to such eligible persons as may be selected by the Committee.
4.2. Terms of Performance Grants . Performance Grants shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Amount of Performance Grant and Performance Measures . The Agreement shall set forth the amount of the Performance Grant and a description of the Performance Measures and the Performance Period applicable to such Performance Grant, as determined by the Committee in its discretion.
 
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(b) Vesting and Forfeiture . The Agreement shall provide, in the manner determined by the Committee in its discretion, for the vesting of a Performance Grant, if specified Performance Measures are satisfied during the specified Performance Period, and for the forfeiture of all or a portion of such award, if specified Performance Measures are not satisfied during the specified Performance Period.
(c) Settlement of Vested Performance Grants . The Agreement (i) shall specify whether a Performance Grant may be settled in shares of Common Stock, Restricted Stock, Restricted Stock Units, cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award, if any. If a Performance Grant is settled in shares of Restricted Stock, a certificate or certificates or other indicia of ownership representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Grant in shares of Common Stock or Restricted Stock the holder of such award shall have no rights as a stockholder of the Company with respect to any shares of Common Stock subject to such award and shall have rights as a stockholder of the Company in accordance with Section 5.10.
(d) Minimum Performance Period . The minimum Performance Period for any Performance Grant is one year from the date such grant is made.
4.3. Termination of Employment or Service .
(a) Disability, Retirement and Death . Unless otherwise set forth in the Agreement, if the employment with or service to the Company of the holder of a Performance Grant terminates during the Performance Period by reason of Disability, Retirement or death, the Performance Period shall continue and the holder, or the holder’s executor, administrator, legal representative, beneficiary or similar person, as applicable, shall be entitled to a prorated award. Such prorated award shall be equal to the value of the award at the end of the Performance Period multiplied by a fraction, the numerator of which shall equal the number of months such holder was employed with or performing services for the Company during the Performance Period (fractional months shall be ignored) and the denominator of which shall equal the number of months in the Performance Period; provided, however, that such holder, or such holder’s executor, administrator, legal representative, beneficiary or similar person, as applicable, shall not be entitled to payment or distribution of such Performance Grant earlier than the date set forth in the Agreement.
(b) Other Termination . Unless otherwise set forth in the Agreement, if the employment with or service to the Company of the holder of a Performance Grant terminates during the Performance Period for any reason other than Disability, Retirement or death, each Performance Grant that is not vested shall be immediately forfeited.
 
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V. GENERAL
5.1. Effective Date and Term of Plan . This Plan shall be submitted to the stockholder(s) of the Company for approval and, if approved, shall become effective as of the date of approval by the Board. No Stock Option may be exercised prior to the date of such stockholder approval. This Plan shall terminate when shares of Common Stock are no longer available for the grant, exercise or settlement of awards, unless terminated earlier by the Board or the Committee. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. If this Plan is not approved by the stockholder(s) of the Company, this Plan and any awards granted hereunder shall be null and void.
5.2. Amendments . The Board or the Committee may amend or terminate this Plan, and except as provided in Sections 2.1(e) and 2.2(e), the Committee may amend outstanding awards under this Plan in any manner as it shall deem advisable in its sole discretion, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) and Section 422 of the Code; provided, however, that no amendment of the Plan shall be made without stockholder approval if such amendment would increase the maximum number of shares of Common Stock available under this Plan (subject to Section 5.7). No amendment of the Plan or an outstanding award may impair the rights of a holder (the determination of which shall be made by the Committee in its sole discretion) of an outstanding award without the consent of such holder. 
5.3. Agreement . The Company may condition an award holder’s right (i) to exercise, vest or settle the award and (ii) to receive delivery of shares, on the execution and delivery to the Company of the Agreement and the completion of other requirements, including, but not limited to, the execution of a nonsolicitation agreement by the recipient and delivery thereof to the Company.
5.4. Transferability of Stock Options . Stock Options may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by the holder thereof, except by will or the laws of descent and distribution; provided, however, that unless otherwise specified in the Agreement, as long as the holder continues employment with or service to the Company, such holder may transfer Stock Options to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of Stock Options to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an equity interest in the limited liability company or partnership to which the transfer is made. Any transfer of Stock Options shall be in a form acceptable to the Committee, shall be signed by the holder and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If a Stock Option is transferred to a Family Member or to a Family Entity, such Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution.
5.5. Tax Withholding . The Company shall have the right to require, as of the grant, vesting, or exercise of an award, the sale of any shares of Common Stock, the receipt of any dividends or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other income, social insurance, payroll or other tax-related items which may be required to be withheld or paid in connection with such award. An
 
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Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “ Tax Date ”) in the amount necessary to satisfy any such obligation, or withhold an amount of cash which would otherwise be payable to a holder, including withholding from wages or other cash compensation otherwise due to the holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of a Stock Option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, in each case to the extent set forth in the Agreement relating to an award, or (E) any combination of (A) and (B). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder
5.6. Restrictions on Shares . Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting, exercise or settlement of such award or the delivery of shares thereunder, such award shall not vest, be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. In addition, the Committee may condition the grant of an award on compliance with certain listing, registration or other qualifications applicable to the award under any law or any obligation to obtain the consent or approval of a governmental body. The Company may require that certificates or other indicia of ownership evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.
5.7. Adjustment . In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) available under this Plan, the maximum number of securities available for Stock Awards and Performance Grants, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding Stock Option and the purchase price per security, the terms of each outstanding Stock Option, the maximum number of securities with respect to which Stock Options or SARs (or a combination thereof), or Stock Awards or
 
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Performance Grants may be made or granted during any calendar year to any person, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding SAR and the base price per SAR, the terms of each outstanding SAR, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding Stock Award or Performance Grant, and the terms of each outstanding Stock Award or Performance Grant shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding Stock Options and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the adjustment or first vesting, exercise or settlement of such award in whole or in part occurring after such adjustment, as the Committee may determine, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award.
5.8. Change in Control . As of the effective date of a Change in Control (a) each outstanding Stock Option and SAR granted under the Plan shall become fully vested and exercisable, (b) the Restriction Period applicable to each outstanding Stock Award granted under the Plan shall lapse, (c) the Performance Period applicable to any outstanding Performance Grant issued under the Plan shall lapse, and (d) the Performance Measures applicable to any outstanding award under the Plan shall be deemed to be satisfied at the target level (or if greater, at the performance level actually attained). Notwithstanding any provision of this Plan to the contrary, each Stock Option or SAR granted to a holder whose employment is terminated for an eligible reason according to the terms of the Company severance policy applicable to the holder as of the effective date of a Change in Control during the period commencing on and ending twenty-four months after the effective date of the Change in Control shall remain exercisable by such holder (or his or her legal representative or similar person) until the earlier of (y) the end of the severance period applicable to the holder under such severance policy or, if later, the end of the otherwise applicable Post-Termination Exercise Period, or (z) the expiration date of the term of the Stock Option or SAR. 
5.9. No Right of Participation or Employment . No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any Affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any Affiliate of the Company to terminate the employment of any person at any time without liability hereunder.
5.10. Rights as Stockholder . No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.
5.11. Designation of Beneficiary . If permitted by the Committee, the holder of an award may file with the Committee a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death. To the extent an outstanding Stock Option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such Stock Option or SAR to the extent permitted under local law.
 
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Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations.
If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding Stock Option and SAR hereunder held by such holder, to the extent exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person.
5.12. Governing Law . This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
5.13. Replacement and Substitute Awards . Notwithstanding anything in this Plan to the contrary, any Stock Option or Stock Award that is intended to be a Replacement or Substitute Award granted in connection with the spin-off of the Company shall be subject to the same terms and conditions as the original First Data award to which it relates.
5.14. Foreign Employees . The Committee may adopt, amend or rescind rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures and to foster and promote achievement of the purposes of this Plan. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, Disability or Retirement or on termination of employment; available methods of exercise or settlement of an award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements. The Committee may also adopt rules, procedures or sub-plans applicable to particular Subsidiaries, Affiliates or locations. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Sections 1.5 and 5.2, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.
5.15. Termination of Employment or Service . Unless otherwise determined by the Committee, an award holder employed by or providing service to an entity that is a Subsidiary or an Affiliate under this Plan shall be deemed to have terminated employment with or service to the Company for purposes of this Plan on the date that such entity ceases to be a Subsidiary or an Affiliate hereunder.
 
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Exhibit 10.9
THE WESTERN UNION COMPANY
2006 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN

THE WESTERN UNION COMPANY
2006 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN
1. Purpose. The purposes of the 2006 Non-Employee Director Equity Compensation Plan (the “ Plan ”) of The Western Union Company, a Delaware corporation (the “ Company ”), are (i) to align the interests of the Company’s stockholders and members of the Board of Directors of the Company (the “ Board ”) who are not employees of the Company or any of its subsidiaries by increasing the proprietary interest of the Board members in the Company’s growth and success and (ii) to advance the interests of the Company by attracting, motivating and retaining highly qualified Board members.
2. Administration. The Plan shall be administered by the Compensation and Benefits Committee of the Board (the “ Committee ”). Subject to the terms, conditions and restrictions specified in Sections 5, 6 and 7, the Committee may grant any one or a combination of the following awards under this Plan to eligible persons: (i) non-qualified stock options (“ NQOs ”), (ii) stock appreciation rights (“ SARs ”), (iii) restricted stock awards, (iv) unrestricted stock awards, and (v) restricted stock units.
The Committee shall, subject to the terms of this Plan, select from among the eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. In exercising its power and authority hereunder with respect to any NQO, restricted stock award or restricted stock unit granted in connection with the spin-off of the Company and pursuant to the employee matters agreement entered into by the Company as of [              ] (“ Replacement and Substitute Awards ”) held by directors of First Data, the Committee shall cooperate with, in good faith, and give due regard to any information provided by First Data Corporation, including any subsidiary or affiliate (collectively, “ First Data ”).
The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding NQOs and SARs shall become exercisable in part or in full and (ii) all or a portion of the Restriction Period applicable to any restricted stock award or restricted stock unit award shall lapse.
The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish amend and revoke rules and regulations as it deems necessary or desirable for the administration of the Plan, adopt sub-plans applicable to specific subsidiaries, affiliates or locations as it deems necessary or desirable, and may impose, incidental to the grant of an award, conditions with respect to the award. The Committee may require, as a condition to the issuance, exercise, settlement or acceptance of an award under this Plan, that the award recipient agree to mandatory arbitration to settle any disputes relating to such award. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive.

A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting. The Committee may authorize any one or more of their number or the Secretary or any other officer of the Company to execute and deliver documents on behalf of the Committee. In exercising its power and authority hereunder with respect to Replacement and Substitute Awards held by directors of First Data, the Committee shall, in good faith, cooperate with and give due regard to any information provided by First Data.
No member of the Board or the Committee, and no other officer of the Company or Secretary to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board and the Committee and such officers or Secretary shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law.
3. Eligibility. Each member of the Board who is not an employee of the Company, any of its subsidiaries or any of its affiliates (“ Non-Employee Director ”) shall be eligible to receive awards under the Plan. As used herein, the term “subsidiary” means any corporation or other trade or business at least 50% of whose outstanding voting stock is owned, directly or indirectly, by the Company. As used herein, the term “affiliate” means any person who owns, directly or indirectly, at least 10% of the outstanding voting stock of the Company.
In connection with the spin-off of the Company, certain current and former directors of First Data will receive Replacement and Substitute Awards.
4. Shares Available.
(a) Plan Share Limit . Subject to adjustment as provided in Section 9, [                      ] shares of common stock of the Company shall be available under this Plan (the “ Plan Share Limit ”).
(b) Deductions . Shares of common stock which become subject to NQOs and SARs shall apply against and reduce the Plan Share Limit as one share for every one share subject thereto. Shares of common stock which become subject to restricted stock awards, unrestricted stock awards, and restricted stock unit awards shall apply against and reduce the Plan Share Limit as [three] shares for every one share subject thereto or payable pursuant thereto. Dividend equivalents paid with respect to awards shall not apply against or reduce the Plan Share Limit.
(c) Increases . The Plan Share Limit shall be increased by shares of common stock subject to an outstanding award that are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of common stock to pay all or a portion of the exercise price of an award, if any, or to satisfy all or a portion of the tax withholding obligations relating to an award, or to the extent an award is satisfied in cash rather than shares of common stock. Increases in the Plan Share Limit by virtue of this Section 4(c) shall be made in a manner that is consistent with the Plan Share Limit deductions made pursuant to Section 4(b). No increases shall be made in the Plan Share Limit by reason of the exercise of SARs.
 
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(d) Source of Shares . Shares of common stock shall be made available from authorized but unissued shares, treasury shares, reacquired shares, or any combination thereof.
5. Nonqualified Stock Options. Each NQO granted under the Plan shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with the Plan and shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price . The number of shares of common stock subject to a NQO shall be determined by the Committee. The purchase price per share of common stock purchasable upon the exercise of a NQO shall not be less than 100% of the fair market value of a share of common stock on the date of grant of such NQO. As used in the Plan, “fair market value” means the average of the high and low transaction price of a share of common stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the common stock is not listed on the New York Stock Exchange, the average of the high and low transaction price of a share of common stock on the principal national stock exchange on which the common stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided , however , that if fair market value for any date cannot be so determined, fair market value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.
(b) Option Period and Exercisability . The period during which a NQO may be exercised shall be determined by the Committee. The Committee shall determine whether a NQO shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable NQO, or portion thereof, may be exercised only with respect to whole shares of common stock.
(c) Method of Exercise . The NQO may be exercised (i) by giving written notice to the Company specifying the number of whole shares of common stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of common stock (which the optionee has held for at least six months prior to the delivery of such shares or which the optionee purchased on the open market and in each case for which the optionee has good title, free and clear of all liens and encumbrances) having an aggregate fair market value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, or (D) by a combination of (A) and (B), in each case to the extent set forth in the agreement relating to the NQO and (ii) by executing such documents as the Company may reasonably request. Any fraction of a share of common stock which would be
 
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required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate or other indicia of ownership representing common stock shall be delivered until the full purchase price therefor, and any withholding taxes thereon, as described in Section 12(e), has been paid (or arrangement made for such payment to the Company’s satisfaction).
(d) No Repricing . Subject to Section 9, the repricing or discounting of NQOs is expressly disallowed under this Plan.
6. Stock Appreciation Rights . Each SAR shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with the Plan and shall be subject to the following terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Award . SARs shall entitle the grantee, subject to such terms and conditions as may be determined by the Committee, to receive upon exercise, shares of common stock with an aggregate value equal to the excess of the fair market value of one share of common stock on the date of exercise, as determined by the Committee over the base price of such SAR, multiplied by the number of such SARs which are exercised. The base price of an SAR shall not be less than 100 percent of the fair market value of a share of common stock on the date such SAR is granted.
(b) Exercise Period and Exercisability . The period for exercise of an SAR shall be determined by the Committee. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised only with respect to a whole number of SARs.
(c) Method of Exercise . An SAR may be exercised (i) by giving written notice to the Company specifying the whole number SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.
(d) Settlement In Shares . Upon exercise of an SAR, payment of the settlement amount shall be made to the holder in shares of common stock at 100 percent of the fair market value of a share of common stock on the date of exercise.
(e) No Repricing . Subject to Section 9, the repricing or discounting of SARs is expressly disallowed under this Plan.
7. Stock Awards. Stock awards granted under this Section 7 shall include (i) restricted stock, which shall consist of shares of common stock which are subject to a restriction period and may be subject to other terms and conditions, (ii) unrestricted stock awards, which shall not be restricted against transfer and shall not be subject to forfeiture or other terms or conditions, and (iii) restricted stock units, which shall, contingent upon the expiration of a specified restriction period and subject to additional restrictions that may be contained in the agreement relating thereto, entitle the holder to receive one share of common stock or the fair market value thereof in cash. Each stock award shall be evidenced by an agreement in such form as the
 
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Committee shall prescribe from time to time in accordance with the Plan and shall comply with the following terms and conditions:
(a) Restriction Period . Restrictions shall be imposed for such period or periods as may be determined by the Committee; provided , however , that the Committee, in its discretion, may provide in the agreement circumstances under which the award shall become immediately transferable and nonforfeitable or under which the award shall be forfeited. During any restriction period designated by the Committee, the common stock subject to a restricted stock award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the agreement relating to such award, and the vesting conditions applicable to a restricted stock unit award shall remain in effect.
(b) Share Certificates/Indicia of Ownership . During any restriction period, a certificate or certificates, or other indicia of ownership, representing a restricted stock award may be registered in the holder’s name or a nominee name at the discretion of the Company and may bear a legend, in addition to any legend which may be required pursuant to Section 11(d), indicating that the ownership of the shares of common stock represented thereby is subject to the restrictions, terms and conditions of this Plan and the agreement relating to the restricted stock award. As determined by the Committee, all certificates or other indicia of ownership registered in the holder’s name shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares of common stock subject to the restricted stock award in the event such award is forfeited in whole or in part. Upon termination of any applicable restriction period, or upon the grant of unrestricted stock, in each case subject to the Company’s right to require payment of any taxes in accordance with Section 11(e), a certificate or certificates evidencing ownership, or such other indicia of ownership as determined by the Committee, of the requisite number of shares of common stock shall be delivered to the holder of such award.
(c) Rights with Respect to Restricted Stock Awards . Unless otherwise set forth in the agreement relating to a restricted stock award, and subject to the Committee’s right to cause such award to be cancelled pursuant to an adjustment pursuant to Section 9, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of common stock; provided , however , that a distribution with respect to shares of common stock, other than a regular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of common stock with respect to which such distribution was made.
(d) Rights and Provisions Applicable to Restricted Stock Unit Awards . The agreement relating to a restricted stock unit award shall specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of common stock subject to such award. Prior to the settlement of a restricted stock unit award, the holder thereof shall not have any rights as a stockholder of the Company with respect to the
 
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shares of common stock subject to such award, except to the extent that the Committee, in its sole discretion, may grant dividend equivalents on restricted stock unit awards which are settled in shares of common stock. No shares of common stock and no certificates or other indicia of ownership representing shares of common stock that are subject to a restricted stock unit award shall be issued upon the grant of a restricted stock unit award. Instead, shares of common stock subject to restricted stock unit awards and the certificates or other indicia of ownership representing such shares of common stock shall be distributed only at the time of settlement of such restricted stock unit awards in accordance with the terms and conditions of this Plan and the agreements relating to such restricted stock unit awards.
8. Election to Convert Annual Retainer into Shares of Common Stock. Each Non-Employee Director may from time to time elect, in accordance with procedures to be specified by the Committee, to receive in lieu of all or a part of the annual cash retainer fee for services as a director of the Company, a NQO award under the Plan having a fair value on the date of grant not in excess of two-thirds of the amount of the annual cash retainer fee (or portion thereof) and an unrestricted stock award under the Plan having a fair value on the date of grant not in excess of one-third of the amount of the annual cash retainer fee (or portion thereof), determined in accordance with a valuation methodology consistent with that used by the Company to value share-based awards for accounting purposes.
9. Adjustment. In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of common stock other than a regular cash dividend, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) available under this Plan, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding NQO and the purchase price per security, the terms of each outstanding NQO, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding SAR and the base price per SAR, the terms of each outstanding SAR, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding restricted stock award, unrestricted stock award, and restricted stock unit award, and the terms of each outstanding restricted stock award, unrestricted stock award, and restricted stock unit award, and the maximum number of shares with respect to which restricted stock awards, unrestricted stock awards, and restricted stock unit awards may be made under this Plan shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding NQOs and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the adjustment or first vesting, exercise or settlement of such award in whole or in part occurring after such adjustment, as the Committee may determine, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award.
 
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10. Change in Control. As of the effective date of a Change in Control (a) each outstanding NQO and SAR granted under the Plan shall become fully vested and exercisable and (b) the Restriction Period applicable to each outstanding restricted stock and restricted stock unit award granted under the Plan shall lapse. For purposes hereof, “Change in Control” shall mean:
(a) the acquisition by any individual, entity or group (a “ Person ”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of either (i) the then outstanding shares of common stock of the Company (the “ Outstanding Common Stock ”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Voting Securities ”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this definition; provided further, that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 25% or more of the Outstanding Common Stock or 25% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(b) the cessation of individuals, who constitute the Board (the “ Incumbent Board ”) as of the date the Plan is adopted by the Board, to constitute at least a majority of such Incumbent Board; provided that any individual who becomes a director of the Company subsequent to the date the Plan is approved by the Board whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(c) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “ Corporate Transaction ”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to
 
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vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person who beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
(d) the consummation of a plan of complete liquidation or dissolution of the Company.
11. Miscellaneous Provisions.
(a) No Right of Participation or Service . No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to be retained in the service of the Company, any subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any subsidiary or any affiliate of the Company to terminate the service of any person at any time without liability hereunder.
(b) Rights as Stockholder . No person shall have any rights as a stockholder of the Company with respect to any shares of common stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of common stock or equity security.
(c) Transferability of Non-Qualified Options . NQOs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by the holder thereof, except by will or the laws of descent and distribution; provided , however , that unless otherwise specified in the Agreement, as long as the holder continues service to the Company, such holder may transfer NQOs to a family member or family entity without consideration; provided , however , in the case of a transfer of NQOs to a limited liability company or a partnership which is a family entity, such transfer may be for consideration consisting solely of an entity interest in the limited liability company or partnership to which the transfer is made. Any transfer of NQOs shall be in a form acceptable to the Committee, shall be signed by the holder and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If a NQO is transferred to a family member or to a family entity, such NQO may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such family member or family entity except by will or the laws of descent and distribution. As used herein,
 
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the term “family member” shall mean an award holder’s spouse, parent, child, stepchild, grandchild, sibling, mother or father-in-law, son or daughter-in-law, stepparent, grandparent, former spouse, niece, nephew or brother or sister-in-law, including adoptive relationships, or any person sharing the award holder’s household (other than a tenant or employee). The term “family entity” shall mean a trust in which one or more family members have more than fifty percent of the beneficial interest, a foundation in which the award holder and/or one or more family members control the management of assets and any other entity in which the award holder and/or one or more family members own more than fifty percent of the voting interests.
(d) Restrictions on Shares . Each award hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of common stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting, exercise or settlement of such award or the delivery of shares thereunder, such award shall not vest, be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. In addition, the Committee may condition the grant of an award on compliance with certain listing, registration or other qualifications applicable to the award under any law or any obligation to obtain the consent or approval of a governmental body. The Company may require that certificates or other indicia of ownership evidencing shares of common stock delivered pursuant to any award hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(e) Tax Withholding . The Company shall have the right to require, prior to the issuance or delivery of any shares of common stock, payment by the holder of an award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with an award hereunder.
(f) Agreement and Interpretation . The Company may condition an award holder’s right (i) to exercise, vest or settle an award and (ii) to receive delivery of shares upon the execution and delivery to the Company of a written agreement evidencing such award and the completion of other requirements. By accepting any award or other benefit under the Plan, each participant and each person claiming under or through a participant shall be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee. The masculine pronoun means the feminine and the singular means the plural in the Plan, wherever appropriate.
(g) Designation of Beneficiary . If permitted by the Company, a holder of an award may file with the Committee a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death. To the extent an outstanding NQO or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such NQO or SAR to the extent permitted under local law.
 
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Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations.
If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding NQO or SAR hereunder held by such holder, to the extent exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person.
(h) Governing Law . The Plan, each award hereunder and the related agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the United States Internal Revenue Code of 1986, as amended, or laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
(i) Replacement and Substitute Awards . Notwithstanding anything in this Plan to the contrary, any stock option or stock award that is intended to be a Replacement or Substitute Award granted in connection with the spin-off of the Company shall be subject to the same terms and conditions as the original First Data award to which it relates.
12. Amendment. The Board or the Committee may amend or terminate this Plan, and except as provided in Sections 5(d) and 6(e), the Committee may amend outstanding awards under this Plan in any manner as it shall deem advisable in its sole discretion, subject to any requirement of stockholder approval required by applicable law, rule or regulation; provided , however , that no amendment of the Plan shall be made without stockholder approval if such amendment would increase the maximum number of shares of common stock available under this Plan (subject to Section 9). No amendment of the Plan or an outstanding award may impair the rights of a holder (the determination of which shall be made by the Committee in its sole discretion) of an outstanding award without the consent of such holder.
13. Stockholder Approval and Effective Date. This Plan shall be submitted to the stockholder(s) of the Company for approval and, if approved, shall become effective as of the date of approval by the Board. No NQO may be exercised prior to the date of such stockholder approval. This Plan shall terminate ten years after the date of stockholder approval, or if earlier, when shares of common stock are no longer available for the grant, exercise or settlement of awards, or the Plan is terminated by the Board. Termination of the Plan shall not affect the terms or conditions of any award granted prior to termination. If this Plan is not approved by the stockholder(s) of the Company, this Plan and any awards granted hereunder shall be null and void.
 
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Exhibit 10.10
DIRECTOR INDEMNIFICATION AGREEMENT
Indemnification Agreement (this “ Agreement ”), dated as of                      , 2006 between The Western Union Company, a Delaware corporation (the “ Company ”), and                      (“ Indemnitee ”).
W I T N E S S E T H:
WHEREAS, highly competent persons have become more reluctant to serve as directors of publicly-held corporations unless they are provided with adequate protection through insurance and indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of the corporation.
WHEREAS, directors are increasingly being subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the corporation itself.
WHEREAS, the Board of Directors of the Company (the “ Board ”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Nevertheless, the Board recognizes the limitations on the protection provided by liability insurance and the uncertainties as to the scope and level of such coverage that may be available in the future.
WHEREAS, the Company’s directors have certain existing indemnification arrangements pursuant to the Company’s certificate of incorporation and bylaws and may be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“ DGCL ”). Nevertheless, the Board recognizes the limitations on the protection provided by such indemnification and the uncertainties as to its availability in any particular situation.
WHEREAS, the Board believes that in light of the limitations and uncertainties about the protection provided by the Company’s liability insurance and existing indemnification arrangements and the impact these uncertainties may have on the Company’s ability to attract and retain qualified individuals to serve as directors, the Company should act to assure such persons that there will be increased certainty of such protection in the future.
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be adequately protected.

WHEREAS, Indemnitee is concerned that the protection provided under the Company’s liability insurance and existing indemnification arrangements may not be adequate and may not be willing to serve as a director of the Company without greater certainty concerning such protection, and the Company desires Indemnitee to serve in such capacity and is willing to provide such greater certainty.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
ARTICLE 1
C ERTAIN D EFINITIONS
(a) As used in this Agreement:
“ Change in Control ” shall be deemed to have occurred in any one of the following circumstances occurring after the date hereof: (i) there shall have occurred an event required to be reported with respect to the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) under the Exchange Act, regardless of whether the Company is then subject to such reporting requirement; (ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) shall have become, without prior approval of the Company’s Board, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company’s then outstanding voting securities (provided that as used in this clause (ii), the term “person” shall exclude a trustee or other fiduciary holding securities under an employee benefit plan of the Company); (iii) there occurs a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 51% of the combined voting power of the voting securities of the surviving or resulting entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving or resulting entity; (iv) all or substantially all the assets of the Company are sold or otherwise disposed of in a transaction or series of related transactions; (v) the approval by the stockholders of the Company of a complete liquidation of the Company or the sale or other disposition of all or substantially all of the assets of the Company; or (vi) the individuals who on the date hereof constitute the Board (including, for this purpose, any new director
 
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whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who were directors on the date hereof or whose election or nomination was so approved) cease for any reason to constitute at least a majority of the members of the Board.
“ Corporate Status ” means the status of a person who is or was a director, officer, employee or agent of the Company or who is or was serving at the request of the Company as a director, officer, employee or agent of any other Enterprise.
“ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advancement of expenses is sought by Indemnitee.
“ Enterprise ” means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other person or enterprise.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Expenses ” means all costs and expenses (including, without limitation, fees and expenses of counsel, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage and delivery service fees) incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses shall include expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.
“ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither currently is, nor in the five years previous to its selection or appointment has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (provided that acting as an Independent Counsel under this Agreement or in a similar capacity with respect to any other indemnification arrangements between the Company and its present or former directors shall not be deemed a representation of the Company or Indemnitee) or (ii) any other party to the Proceeding giving rise to a claim for indemnification or advancement of expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
 
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“ Liabilities ” means all judgments, fines (including any excise taxes assessed with respect to any employee benefit plan), penalties and amounts paid in settlement and other liabilities (including all interest, assessments and other charges paid or payable in connection with or in respect of any such amounts) arising out of or in connection with any Proceeding; provided that Liabilities shall not include any Expenses.
“ person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization.
“Proceeding” includes any threatened, pending or completed action, suit or other proceeding (which shall include an arbitration or other alternate dispute resolution mechanism or an inquiry, investigation or administrative hearing), whether civil, criminal, administrative or investigative in nature (including any appeal therefrom) and whether instituted by or on behalf of the Company or any other party, in any such case, in which Indemnitee was, is or may be involved as a party or otherwise by reason of any Corporate Status of Indemnitee or by reason of any action taken (or failure to act) by him or on his part while serving in any Corporate Status (in each case, whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification or advancement of expenses can be provided under this Agreement), or any inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit or other proceeding; provided that Proceeding shall not include an action, suit or other proceeding contemplated by Section 8.06(b).
(b) For the purposes of this Agreement:
References to the “ Company ” shall include, in addition to the surviving or resulting corporation in any merger or consolidation, any constituent corporation (including any constituent of a constituent) absorbed in a merger or consolidation which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another Enterprise, then Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the surviving or resulting corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
References to “ director, officer, employee or agent ” shall include a trustee, general partner, managing member, fiduciary or board of directors’ committee member.
References to “ serving at the request of the Company ” shall include any service as a director, officer, employee or agent of the Company or any other Enterprise which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its
 
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participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company”.
ARTICLE 2
S ERVICES B Y I NDEMNITEE
Section 2.01 . Services By Indemnitee. Indemnitee hereby agrees to serve or continue to serve as a director of the Company, for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his resignation or is removed.
ARTICLE 3
I NDEMNIFICATION
Section 3.01. General . (a) The Company hereby agrees to and shall indemnify Indemnitee and hold him harmless, to the fullest extent permitted by applicable law, from and against any and all Expenses and Liabilities actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding. The phrase “to the fullest extent permitted by applicable law” shall include:
(i) to the fullest extent permitted by the DGCL as in effect on the date of this Agreement, and
(ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
(b) To the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in the defense of any Proceeding or any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in any Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter and any claim, issue or matter related to each such successfully resolved claim, issue or matter. For purposes of this Section 3.01(b) and without limitation, the termination of any Proceeding or any claim, issue or matter in a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such Proceeding, claim, issue or matter.
 
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(c) To the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
Section 3.02 . Exclusions. Notwithstanding any provision of this Agreement to the contrary (including Section 3.01 and Section 4.01), the Company shall not be obligated under this Agreement to indemnify (or advance expenses) in connection with:
(a) any claim made against Indemnitee (i) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company pursuant to Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law or (ii) for reimbursement to the Company of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company in each case as required under the Exchange Act;
(b) except for an action, suit or other proceeding contemplated by Section 8.06(b), any action, suit or other proceeding (or part thereof) initiated by Indemnitee (including any such action, suit or other proceeding (or part thereof) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees), unless (i) the Board authorized the action, suit or other proceeding (or part thereof) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; or
(c) any claim, issue or matter in a Proceeding by or in the right of the Company to procure a judgment in its favor as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent the Delaware Chancery Court or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Delaware Chancery Court or such other court shall deem proper.
ARTICLE 4
A DVANCEMENT O F E XPENSES ; D EFENSE OF C LAIMS
Section 4.01 . Advances. The Company shall advance any Expenses incurred by Indemnitee or on his behalf in connection with a Proceeding within 20 days after receipt by the Company of a written request for advancement of expenses, which request may be delivered to the Company at such time and from time to time as Indemnitee deems appropriate in his sole discretion (whether prior to or after final disposition of any such Proceeding). Advances shall be made without regard to Indemnitee’s ability to repay such amounts and without regard
 
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to Indemnitee’s ultimate entitlement to indemnification under this Agreement or otherwise. Any such advances shall be made on an unsecured basis and be interest free.
Section 4.02 . Repayment of Advances or Other Expenses. Indemnitee agrees that Indemnitee shall reimburse the Company for all amounts advanced by the Company pursuant to Section 4.01 if it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company for such Expenses. Notwithstanding the foregoing, if Indemnitee seeks a judicial adjudication or an arbitration pursuant to Section 6.01(a), Indemnitee shall not be required to reimburse the Company pursuant to this Section 4.02 until a final determination (as to which all rights of appeal have been exhausted or lapsed) has been made.
Section 4.03 . Defense Of Claims. The Company will be entitled to participate in any Proceeding at its own expense. The Company shall not settle any Proceeding (in whole or in part) which would impose any Expense, Liability or limitation on Indemnitee without Indemnitee’s prior written consent, such consent not to be unreasonably withheld. Indemnitee shall not settle any Proceeding (in whole or in part) which would impose any Expense, Liability or limitation on the Company without the Company’s prior written consent, such consent not to be unreasonably withheld.
ARTICLE 5
P ROCEDURES F OR N OTIFICATION OF AND D ETERMINATION OF E NTITLEMENT T O I NDEMNIFICATION
Section 5.01 . Request For Indemnification. (a)   Indemnitee shall notify the Company in writing as soon as reasonably practicable (i) after being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or (ii) if the Company has not been previously notified, after receipt of written notice of any other matter with respect to which Indemnitee intends to seek indemnification or advancement of expenses under Section 3.01 and Section 4.01. The omission by Indemnitee to so notify the Company will not relieve the Company from any liability which it may have to Indemnitee (i) under this Agreement except and only to the extent the Company can establish that such omission to notify resulted in actual material prejudice to the Company or (ii) otherwise than under this Agreement.
(b) Indemnitee may thereafter deliver to the Company a written request for indemnification pursuant to this Agreement at such time and from time to time as Indemnitee deems appropriate in his sole discretion, which request shall also be deemed a request for advancement of expenses under Section 4.01.
Section 5.02 . Determination of Entitlement. (a)   Except as otherwise provided pursuant to Section 3.01(b) and Section 3.01(c), upon the final disposition of the matter that is the subject of the request for indemnification
 
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delivered pursuant to Section 5.01(b), a determination shall be made with respect to Indemnitee’s entitlement thereto in the specific case. If a Change in Control shall not have occurred, such determination shall be made (i) by a majority vote of the Disinterested Directors or of a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors (in either case, even though less than a quorum of the Board) or (ii) if there are no Disinterested Director or the Disinterested Directors so direct, by Independent Counsel. If a Change in Control shall have occurred, such determination shall be made by Independent Counsel. Any determination made by Independent Counsel pursuant to this Section 5.02(a) shall be in the form of a written opinion to the Board, a copy of which shall be delivered to Indemnitee. Indemnitee shall reasonably cooperate with the person or persons making such determination including providing to such person or persons upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including fees and expenses of counsel) incurred by Indemnitee in so cooperating with the person or persons making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification), and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(b) If the determination is to be made by Independent Counsel, such Independent Counsel shall be selected as provided in this Section 5.02(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, the party receiving the notice may, within 10 days after receipt thereof, deliver to the other a written objection to such selection; provided that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Article 1 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a proper and timely objection is made, the counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction (or, at Indemnitee’s option pursuant to Section 6.01, an arbitration) has determined that such objection is without merit. If, within 20 days after receipt by the Company of a request for indemnification pursuant to Section 5.01(b), no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction (or, at Indemnitee’s option pursuant to Section 6.01, an arbitration) for resolution of any objection which shall have been made to the selection of Independent Counsel and/or for the appointment of another person as Independent
 
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Counsel, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel. The Company agrees to pay the reasonable fees and expenses of any Independent Counsel appointed pursuant to this Section and to indemnify such person against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto except for gross negligence or willful misconduct.
(c) If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination.
Section 5.03 . Presumptions and Burdens of Proof; Effect of Certain Proceedings. (a)   In making any determination as to Indemnitee’s entitlement to indemnification hereunder, Indemnitee shall be entitled to a presumption that he is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 5.01(b), and the Company shall have the burdens of coming forward with evidence and of persuasion to overcome that presumption.
(b) The termination of any Proceeding or of any claim, issue or matter therein by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption (i) that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, (ii) that with respect to any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct was unlawful or (iii) that Indemnitee did not otherwise satisfy the applicable standard of conduct to be indemnified pursuant to this Agreement.
(c) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Company or other Enterprise, as applicable, including financial statements, or on information supplied to Indemnitee by the officers of such entity in the course of their duties, or on the advice of legal counsel for such entity or on information or records given or reports made to such entity by an independent certified public accountant, appraiser or other expert selected with reasonable care by such entity. The provisions of this Section 5.03(c) shall not be deemed to be exclusive or to limit in any way other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct to be indemnified pursuant to this Agreement.
(d) The knowledge or actions or failure to act of any other director, officer, employee or agent of the Company or other Enterprise, as applicable, shall not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement.
(e) If a determination as to Indemnitee’s entitlement to indemnification shall not have been made pursuant to this Agreement within 60 days after the final
 
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disposition of the matter that is the subject of the request for indemnification, the requisite determination of entitlement to indemnification shall be deemed to have been made in favor of Indemnitee, and Indemnitee shall be entitled to such indemnification, absent a misstatement of a material fact in the information provided by Indemnitee pursuant to Section 5.01(b) and Section 5.02(a) or an omission of a material fact necessary in order to make the information provided not misleading; provided that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person or persons making the determination in good faith requires such additional time to obtain or evaluate any documentation or information relating thereto.
ARTICLE 6
R EMEDIES OF I NDEMNITEE
Section 6.01. Adjudication or Arbitration . (a) Indemnitee shall be entitled to an adjudication (by a court of competent jurisdiction or, at Indemnitee’s option, through an arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association) of any determination pursuant to Section 5.02 that Indemnitee is not entitled to indemnification under this Agreement. Any such adjudication shall be conducted in all respects as a de novo trial or arbitration on the merits, and any prior adverse determination shall not be referred to or introduced into evidence, create a presumption that Indemnitee is not entitled to indemnification or advancement of expenses, be a defense or otherwise adversely affect Indemnitee. In any such judicial proceeding or arbitration, the provisions of Section 5.03 (including the presumption in favor of Indemnitee and the burdens on the Company) shall apply.
(b) Indemnitee shall also be entitled to an adjudication (by a court of competent jurisdiction or, at Indemnitee’s option, through an arbitration as described above) of any other disputes under this Agreement.
(c) If a determination shall have been made pursuant to Section 5.02 that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 6.01, absent a misstatement of a material fact in the information provided by Indemnitee pursuant to Section 5.01(b) and Section 5.02(a) or an omission of a material fact necessary in order to make the information provided not misleading.
(d) In connection with any judicial proceeding or arbitration commenced pursuant to this Section 6.01, the Company shall not oppose Indemnitee’s right to seek such adjudication, shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding or enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.
 
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ARTICLE 7
D IRECTORS ’ AND O FFICERS ’ L IABILITY I NSURANCE
Section 7.01 . D&O Liability Insurance. (a)   The Company shall obtain and maintain a policy or policies of insurance (“ D&O Liability Insurance ”) with reputable insurance companies providing liability insurance for directors of the Company in their capacities as such (and for any capacity in which any director of the Company serves any other Enterprise at the request of the Company), in respect of acts or omissions occurring while serving in such capacity, on terms with respect to coverage and amount (including with respect to the payment of expenses) no less favorable than those of such policy in effect on the date hereof except for any changes approved by the Board prior to a Change in Control.
(b) Indemnitee shall be covered by the Company’s D&O Liability Insurance policies as in effect from time to time in accordance with the applicable terms to the maximum extent of the coverage available for any other director under such policy or policies. The Company shall, promptly after receiving notice of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise), give notice of such Proceeding to the insurers under the Company’s D&O Liability Insurance policies in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actions to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. The failure or refusal of any such insurer to pay any such amount shall not affect or impair the obligations of the Company under this Agreement.
(c) Upon request by Indemnitee, the Company shall provide to Indemnitee copies of the D&O Liability Insurance policies as in effect from time to time. The Company shall promptly notify Indemnitee of any material changes in such insurance coverage.
ARTICLE 8
M ISCELLANEOUS
Section 8.01 . Nonexclusivity of Rights. The rights of indemnification and advancement of expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled to under applicable law, the Company’s certificate of incorporation or bylaws, any other agreement, any vote of stockholders or resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of expenses than would be afforded currently under this Agreement,
 
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it is the intent of the parties hereto that Indemnitee shall be entitled under this Agreement to the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder or otherwise shall not prevent the concurrent assertion or employment of any other right or remedy.
Section 8.02 . Subrogation, etc. (a)   In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all actions necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(c) The Company’s obligation to indemnify or advance expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such Enterprise.
Section 8.03 . Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee or on his behalf, whether for Liabilities and/or Expenses in connection with a Proceeding or other expenses relating to an indemnifiable event or transaction under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action, suit or other proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving rise to such action, suit or other proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
Section 8.04 . Amendment. This Agreement may not be modified or amended except by a written instrument executed by or on behalf of each of the parties hereto.
 
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Section 8.05 . Waivers. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a writing signed by the party against which such waiver is to be asserted. Unless otherwise expressly provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.
Section 8.06 . Expenses. (a)   The Company shall pay all costs and expenses (including fees and expenses of counsel) incurred by the Company and Indemnitee in connection with the preparation of this Agreement.
(b) The Company shall indemnify and hold Indemnitee harmless from any and all costs and expenses (including fees and expenses of counsel) actually and reasonably incurred by Indemnitee or on his behalf in seeking (whether through a judicial proceeding or arbitration (including any appeal resulting therefrom) or otherwise) to enforce any rights against the Company for indemnification or advancement of expenses (whether under this Agreement or otherwise) or to recover under any liability insurance policy maintained by any person for the benefit of Indemnitee in connection with the performance of his duties for or on behalf of the Company, in each case, whether or not Indemnitee is successful (in whole or in part) with respect to his claims. The Company shall pay (or reimburse Indemnitee for the payment of) any such costs or expenses within 20 days after receipt by the Company of a written request for the payment of such amounts, which request may be delivered to the Company at such time or from time to time as Indemnitee deems appropriate in his sole discretion (whether prior to or after final disposition of any such matter). Indemnitee shall have no obligation to reimburse any amounts paid by the Company pursuant to this Section 8.06(b).
Section 8.07 . Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters covered herein and supersedes all prior oral or written understandings or agreements with respect to the matters covered herein. This Section 8.07 shall not be construed to limit any other rights Indemnitee may have under the Company’s certificate of incorporation or bylaws, applicable law or otherwise.
Section 8.08 . Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the
 
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fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 8.09 . Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered by hand or by courier and receipted for by the party to whom said notice or other communication shall have been directed, (b) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed or (c) if sent by facsimile transmission and fax confirmation is received, on the next business day following the date on which such facsimile transmission was sent. Addresses for notice to either party are as shown on the signature page of this Agreement, or such other address as any party shall have given by written notice to the other party as provided above.
Section 8.10 . Binding Effect. (a)   The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director of the Company.
(b) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, heirs, executors, administrators or other successors. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all or a substantial part of the business or assets of the Company, by written agreement in the form and substance reasonably satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the manner and to the same extent that the Company would be required to perform if no such succession had taken place.
(c) The indemnification and advancement of expenses provided by this Agreement shall continue as to a person who has ceased to be a director, officer, employee or agent or is deceased and shall inure to the benefit of the heirs, executors, administrators or other successors of the estate of such person.
Section 8.11 . Governing Law. This Agreement and the legal relations among the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.
 
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Section 8.12 . Consent To Jurisdiction. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 6.01, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action, suit or other proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Chancery Court and any court to which an appeal may be taken in such action, suit or other proceeding (the “ Delaware Court ”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action, suit or other proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action, suit or other proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action, suit or other proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
Section 8.13 . Headings. The Article and Section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
Section 8.14 . Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 8.15 . Use of Certain Terms. As used in this Agreement, the words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular paragraph, subparagraph, section, subsection, or other subdivision. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.
 
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be effective as of the date first above written.

THE WESTERN UNION COMPANY	
		
By:	 	 	
Name:	 		
Title:	 		
	
Address:	
Facsimile:	
Attention:	
	
With a copy to:	
	
Address:	
Facsimile:	
Attention:	
	
[INDEMNITEE]	

	
Address:	
Facsimile:	
	
With a copy to:	
	
Address:	
Facsimile:	
Attention:	
 
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Exhibit 10.11
 
WESTERN UNION HONG KONG LIMITED
Employment Agreement

Date:	  	30 January 2004	
		
To:	  	Ian Marsh
Chez Tabois,
Le Moulin de Tabois,
16370 St. Sulpice de Cognac,
Charante
France	
 
Western Union Hong Kong Limited (the “Company”) is pleased to offer you employment on the terms and conditions set forth in this agreement between you and the Company (the “Agreement”), as follows:
 
1.	TERM OF AGREEMENT	
 
a)	The term of you employment pursuant to this Agreement begins 16 February 2004. You will be subject to a three month probationary period, during which period your employment may be terminated by the Company for any reason upon 7 days notice. Your initial title will be Senior Vice President and Managing Director, Asia Pacific, and you will be reporting to Christina Gold. The Company may change your title and reporting relationship at any time without such a change being deemed a termination of your employment or a breach of this Agreement.	
 
b)	You agree to comply with the Company’s decision should it determine it necessary or appropriate to change the entity of your legal employer, and the jurisdiction where you are expected to perform your job duties (despite your residence). The Company, may, in its discretion, second your services to another company in the Company’s related group of entities. Your normal place of work will be in the Hong Kong SAR. However, you may be required to travel worldwide on the Company’s business and to work in other countries in the proper performance of your duties or as the Company may reasonably direct, at no extra pay or remuneration. The Company will, insofar as is reasonably possible, undertake to obtain all necessary work permits, visas and permission to enable you to work in such places as you may be required to work.	
 
2.	SALARY	
 
a)	You agree that your base remuneration, as compensation for your services hereunder, will be paid by the Company at the annual rate of $280,000 U.S. dollars, payable to you either monthly or semi-monthly in accordance with the Company’s normal payroll practices. The Company may, in its discretion, pay your salary to you in Hong Kong dollars, converted at a reasonable exchange rate on a semi-monthly, monthly, or quarterly rate in the Company’s sole discretion. The total monthly base remuneration amount is comprised of (i) Core pay – 60% of total base remuneration; and (ii) housing benefit – 40% of total base remuneration. If you are not eligible to take advantage of the tax	

 	saving opportunity resulting from this pay structure, your entire remuneration amount will be reported as normal income.	
 
b)	You acknowledge that you are solely responsible for paying personal income taxes pursuant to the relevant tax law of your tax residence.	
 
3.	BENEFITS (NON-SALARY)	
 
Incentive Plan
 
You will be eligible to participate in the Company’s 2004 Performance First Incentive Plan, in accordance with the terms and conditions thereof which will be provided to you, with an annual target incentive bonus amount equal to 50% of your annualized base salary. This target may be changed by the Company in its sole discretion for subsequent years. Please understand that no payment under this plan is guaranteed, and is subject to attainment of corporate and business unit financial performance thresholds as well as individual performance ratings attained for the year. Any annual or other bonus payments are discretionary, non-binding and revocable for future years. You acknowledge the discretionary character of such payments and expressly renounce any claim that any repetition of any such payments, even if the repeated payments are in the same or similar amount as in a previous year, give you a claim to the payment of such an amount or to any payment whatsoever in any succeeding year.
 
If a bonus payout is earned, it is normally payable in March of the subsequent bonus year (e.g. 2004 bonus earned is paid in March 2005) and is prorated based on your start date.
 
Stock Options
 
Upon your acceptance of this offer, you will be recommended for a grant of an option to purchase 35,000 shares of the common stock of First Data Corporation (“Options”) pursuant to the terms of the Company’s Long-Term Incentive Plan (“LTIP”). This stock option grant requires the approval of First Data’s Chief Executive Officer and the First Data Compensation Committee (“Committee”) of the Company’s Board of Directors (“Board”). Grant of the Options is subject to the Committee’s approval of the amount and terms of the grant of the Options to you. All your rights and obligations with respect to any options granted to you are subject to the terms and conditions of the LTIP plan as well as the terms and conditions of the stock option agreement. If approved, this grant will be a one-time grant. There is no guarantee or promise that any future grants will be made or recommended.
 
Health and Welfare
 
You will be eligible to participate in the Company’s health and welfare benefits programme, and the Hong Kong Provident Fund, under the terms and conditions applicable to employees at your location, which will be described to you in detail. Further information about these benefit plans is set out in the plan summaries, which you may access in the First Data Corporation Intranet or may obtain from the regional Human Resources office, and which it shall be your duty to know and understand.
 
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Vacation
 
You will be entitled to twenty five (25) working days’ paid leave each calendar year upon successful completion of initial six (6) consecutive months of employment. The length of your employment with Western Union HK and your time employed with any of the Company’s affiliated companies counts towards satisfying the 6-month requirement. If you began working with the Company after January 1 of this year, your vacation entitlement will be pro-rated based on the date on which your employment began.
 
Vacation leave not used during the calendar year up to a maximum of fourteen (14) days may be carried forward for use during the succeeding calendar year. Any such carried-forward leave that is not used in the immediately succeeding year will be cancelled. You will not be entitled to any payment in lieu of cancelled or unused vacation leave.
 
Car Allowance
 
The Company will lease, for your business use, an insured and maintained automobile and hired driver as deemed appropriate by the Company for use in Hong Kong. The make and style of this automobile will be determined by the Company. If any company-provided vehicle and/or driver would constitute taxable income to you, it will not be taken into account as “compensation” for purposes of other Company benefit plans, but in this event the Company will provide a cash gross up amount to you to help offset the individual income tax liability.
 
Mobility Allowance
 
You will receive a mobility allowance payment equal to one-month’s salary (USD$23,333.33), less taxes, immediately prior to the start of your assignment and again on the first anniversary date of your relocation to Hong Kong. This amount will constitute taxable income to you but will not be taken into account as “compensation” for purposes of other Company benefit plans. No tax gross-up will be provided with respect to this allowance.
 
Relocation Bonus
 
A relocation bonus of USD$5,000 will be paid to you upon your relocation to Hong Kong prior to your assignment departure date. This amount will constitute taxable income to you but will not be taken into account as “compensation” for purposes of other Company benefit plans. The Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Household goods – Shipment and Storage
 
The Company will pay up to USD$18,200 to ship selected household goods to Hong Kong, and to the extent you elect to ship goods in an amount or by means that do not incur shipping expenses up to this amount, the Company will pay you the balance in a lump sum to facilitate your furnishing of your Hong Kong residence. In addition, the Company will pay you an amount of USD $1,150 per month during the term of your assignment in Hong Kong, for a maximum of 24 months, in lieu of payment for any storage of goods or household maintenance fees. You
 
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may use such amounts to help pay any property management fees related to your personal residences outside Hong Kong.
 
These amounts may constitute taxable income to you but will not be taken into account as “compensation” for purposes of other Company benefit plans. To the extent these amounts constitute taxable income to you, the Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to these amounts.
 
International Service Allowance (Goods and Services Allowance)
 
During the term of your assignment in Hong Kong, beginning with the date you move into your permanent residence in Hong Kong, you will receive an International Service Allowance equal to USD$4,788.75/per month, which will be paid monthly. This allowance is intended to help compensate you for the higher cost of goods and services in Hong Kong. This amount may constitute taxable income to you but will not be taken into account as “compensation” for purposes of other Company benefit plans. To the extent these amounts constitute taxable income to you, the Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to these amount.
 
The monthly International Service Allowance will be reviewed on any change to your personal/family status in Hong Kong. In the absence of any status change, the allowance will be reviewed annually and may be adjusted upwards or downwards if the cost of living in your Host Country increases or decreases by 5%, relative to your Home Country. The Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Housing Allowance
 
In addition to the portion of your Base Salary denominated as a housing allowance in Section 1, the Company will also pay you a Housing Allowance of USD$14,341.91/per month during the term of your assignment in Hong Kong, up to a maximum of 24 months, which will be paid monthly. You may use this allowance to rent, lease, or purchase a dwelling place, but the Company shall in no event have any responsibility or ownership interest with respect to such dwelling. The Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Utility Allowance
 
The Company will also pay you a Utility Allowance of USD$2,643.08 per month during the term of your assignment in Hong Kong, which will be paid monthly. This amount may constitute taxable income to you but will not be taken in account as “compensation” for purposes of other Company benefit plans. The Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Club Membership Fees
 
The Company will pay up to $USD500 per month to maintain your membership in selected Hong Kong professional associations or clubs. The Company may pay this amount to you
 
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directly or, at the Company’s discretion, directly to such club(s) or association(s). The Company will structure such payment in a way that ensures tax deductibility to the Company and minimizes your individual income tax liability. To the extent this amount constitutes taxable income to you, the Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Home leave/Personal Travel
 
The Company will pay for two round trips (coach class air travel) each year for your two children living and working and/or attending college or university outside Hong Kong, from the closest airport serving the location of their work and/or college or university to Hong Kong. To the extent this amount constitutes taxable income to you, the Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
Tax Preparation Assistance
 
The Company will pay a tax advisor/preparer up to $10,000 per year during the term of your employment to assist you in planning, preparation, and filing of your individual income tax returns. This amount may constitute taxable income to you but will not be taken into account as “compensation” for purposes of other Company benefit plans. The Company will provide a cash gross up amount to you to help offset the individual income tax liability with respect to this amount.
 
4.	POSITION AND TRANSFER	
 
You agree to perform any functions and duties related to your position and pursuant to the Company’s instruction. You also agree that the Company may from time to time make changes to your title, reporting relationships, or job duties and responsibilities on the basis of your performance or the Company’s business requirements.
 
5.	FULL TIME WORK	
 
You acknowledge that you should devote your time to work for the Company and shall accept no other work, for which compensation (whether in the form of cash or otherwise) is received, without prior approval of the Company.
 
Your normal working hours are from 9:00 a.m. to 6:00 p.m., Monday to Friday, with an hour break for lunch. You should, however, make yourself available at other times if the demands of the business so require. You are not entitled to any overtime payment for any additional hours worked.
 
6.	NON-SOLICITATION	
 
a)	Throughout the duration of your employment contract and for TWELVE MONTHS following termination thereof, you hereby undertake not to employ directly or to solicit collaboration for your own benefit or that of a third party, employees of the Company or of any company in the Company’s Group and not to perform, in any form whatsoever, any action of a nature that may result in the poaching of such employees.	
 
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b)	Your agree that your any violation of the foregoing Non-solicitation covenant will automatically render you liable to pay the Company a penalty at a lump-sum amount equal to twelve months of your Gross Salary (i.e. your average monthly salary and regular monthly allowances during the last six months of employment by the Company), without there being the need for the Company to produce an order prohibiting the continuation of such solicitation activity or to prove its damages due to your violation. You agree that this penalty is additional to the Company’s right under the section of Indemnification, below.	
 
7.	NON-COMPETITION	
 
Due to the extremely competitive market in which the Company evolves and to the knowledge, particularly of a commercial, financial, scientific, industrial or marketing nature concerning the activities, operations and studies of the Company or another company of the Company’s Group, acquired by you in the performance of your duties, you agree that you shall be bound, with regard to the Company, to an obligation of non-competition in the following conditions.
 
a)	In the event of departure from the Company occurring for any reason whatsoever, you hereby undertake not to enter into the service of a company studying, manufacturing or selling (including wholesale and retail) products or services that are identical or similar to those that are studied, manufactured or sold by the Company, or which are intended to provide the same or comparable benefits to the purchasers of such products or services in Taiwan, Hong Kong, or the People’s Republic of China. You agree that you shall more generally refrain from taking a direct or indirect interest, in any form whatsoever, including in particular through consultancy work or acquisition of shareholding (except for current stock exchange transactions) in an activity of this type, be it in existence or in the process of creation.	
 
b)	You agree that this obligation of non-competition applies to not only to Hong Kong but to Taiwan and the People’s Republic of China, as well as to the other countries in which you may have performed your duties during the two years preceding your last day of actual work within the Company. Should you so desire, the list of countries in which you may have performed your duties during these two years will be given to you, within 12 business days following receipt of such request.	
 
c)	This non-competition covenant is for a duration of TWELVE MONTHS as from the expiration date of your employment contract with the Company.	
 
d)	In consideration thereof, the Company, if at its discretion decides to request you to comply with this non-competition clauses, shall pay you an indemnity corresponding to ONE month’s Base Salary (i.e. your average monthly salary during the last six months of your employment by the Company, excluding any allowances) for each one-month period of non-competition. If the Company decides to request so, you agree to comply with the Non-Competition obligation without objection; rejection to the Company’s request will be deemed violation of this Non-Competition clause.	
 
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e)	During the non-competition period, you undertake to communicate to the Company, if the latter so requests, the name and address of your new employer. The Company reserves the right to inform the new employer of the existence and contents of the present non-competition clause. You agree that you shall inform the latter of the present non-competition clause prior to entering into any commitment.	
 
f)	Any violation of the non-competition covenant shall release the Company from payment of the financial compensation for the non-competition obligation stipulated above and shall render you liable to reimburse the amounts you may have received in this respect to the Company.	
 
g)	You agree that your any violation of the non-competition covenant will automatically render you liable to pay the Company an indemnity at a lump-sum amount equal to twelve months of your Gross Salary, without there being the need for the Company to produce an order prohibiting the continuation of such competing activity or to prove its damages due to your violation. You agree that this penalty is additional to the Company’s right under Section of Indemnification, below.	
 
h)	The Company expressly reserves the right to waive the benefits of this covenant at any time, particularly in the event such covenant should become without interest.	
 
i)	Upon expiration of your employment contract and if this non-competition covenant is still in force at this time, you hereby agree that this special provision be included in the work certificate that will be given to you.	
 
8.	CONFIDENTIALITY	
 
You agree that the Company is engaged in a highly competitive business and has expended, and continues to expend, significant money, skill, and time to develop and maintain valuable customer relationships, trade secrets, and confidential and proprietary information. You agree that work your work for the Company will continue to bring you into close contact with many of the Company’s customers, Trade Secrets, Confidential Information and Third Party Information (as defined below), the disclosure of which would cause the Company significant and irreparable harm. You recognize that any unauthorized disclosure of Third Party Information could breach non-disclosure obligations or violate applicable laws or Company policy. You further agree that the covenants in this Agreement are reasonable and necessary to protect the Company’s legitimate business interests in its customer relationships, Trade Secrets, Confidential Information, and Third Party Information.
 
Company “Trade Secrets” includes but is not limited to the following:
 
 	(1)	any data or information that is competitively sensitive or commercially valuable, and not generally known to the public, including, but not limited to, products planning information, marketing strategies, marketing results, forecasts or strategies, plans, finance, operations, reports, data, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Company, its customers, clients, and suppliers; and	
 
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 	(2)	any scientific or technical information, design, process, procedure, formula, or improvement, computer software, object code, source code, specifications, inventions, systems information, whether or not patentable or copyrightable.	
 
Company “Confidential Information” means any data or information and documentation, other than Trade Secrets, which is valuable to the Company and not generally known to the public, including but not limited to:
 
 	(1)	Financial information, including but not limited to earnings, assets, debts, prices, fee structures, volumes of purchases or sales, or other financial data, whether relating to the Company generally, or to particular products, services, geographic areas, or time periods; and	
 
 	(2)	Supply and service information, including but not limited to information concerning the goods and services utilized or purchased by the Company, the names and addresses of suppliers, terms of supplier services contracts, or of particular transactions, or related information about potential suppliers, to the extent that such information is not generally known to the public, and to the extent that the combination of suppliers or use of particular suppliers, though generally known or available, yields advantages to the Company the details of which are not generally known.	
 
“Third Party Information” means any data or information of the Company’s customers, suppliers, consumers or employees that the Company is prohibited by law, contract or Company policy from disclosing. By way of example such information includes but is not limited to:
 
 	(1)	Product specifications, marketing strategies, pricing, sales volumes, discounts;	
 
 	(2)	Nonpublic personal information regarding customers, including but not limited to names, addresses, credit card numbers, financial transactions, and account balances;	
 
 	(3)	Personnel information, including but not limited to employees’ personal or medical histories, compensation or other terms of employment, actual or proposed promotions, hiring, resignations, disciplinary actions, terminations or reasons therefore, training methods, performance skills, qualifications, and abilities, or other employee information; and	
 
 	(4)	Customer information, which is not protected by a separate confidentiality agreement, including but not limited to any compilations of past, existing or prospective customers, agreements between customers and the Company, status of customer accounts or credit, the identity of customer representatives responsible for entering into contracts with the Company, specific customer needs and requirements, or related information about actual or prospective customers or nonpublic consumer information.	
 
You agree that for so long as the pertinent information or documentation remains a Trade Secret, you will not use, disclose, or disseminate to any other person, organization, or entity or otherwise employ any Company Trade Secrets. You further agree that during your
 
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employment and after the cessation of his employment with the Company, you will not use, disclose, or disseminate to any other person, organization, or entity or otherwise employ any Company Confidential Information. The obligations set forth herein shall not apply to any Trade Secrets or Confidential Information which shall have become generally known to competitors of the Company through no act or omission of yourself.
 
You agree that for so long as the pertinent information or documentation is subject to protection under Company nondisclosure obligations, policy or applicable law, but in any event not less than two (2) years, you will not use, disclose, or disseminate to any other person, organization, or entity or otherwise employ any Third Party Information.
 
Upon cessation of your employment with the Company or at any time the Company requests, you agree to return all Third Party Information as well as Company materials and Trade Secrets and Confidential Information, and all copies thereof (including without limitation, all memoranda and notes containing the names, addresses, and needs of the Company’s customers and prospective customers) (collectively, the “Information”) in your possession or over which you exercise control, and regardless of whether such materials were prepared by the Company, you, or a third party.
 
In addition, you agree that you will:
 
a)	take the necessary measures to keep the Information strictly confidential, with the exception of Information which is already in the public domain. You acknowledge that disclosure of the Information would cause the Company’s Group considerable damage allowing the Company to engage you liability for gross misconduct.	
 
b)	if you have recourse to documents, correspondence, software, software package and materials, either handwritten or computerized, or more generally all means of communication, in particular Internet or Intranet, you undertake to use such tools for professional purposes only and not to take copies or reproduce such tools for your personal use or for any other use. You also undertake to take care of these tools and must inform the Company in case of any deterioration, loss or theft, and will comply with the Company’s rules relating to the installation and use of such tools as applicable within the Company.	
 
c)	not claim your rights or titles to software or software packages if the rights to such have been obtained for the Company. In particular, you shall not install any software or software package if the rights of use have not been acquired. The installation of software or software packages will only be possible with the original support materials legally acquired.	
 
d)	in case of termination of the employment contract, for any reason whatsoever, you undertake to return all documents, correspondence, software, software packages, including copies, and material put at your disposal or in your possession, upon first request and at the latest upon the effective termination of your duties.	
 
e)	acknowledge that any violation of the present terms can constitute a serious breach of your contractual obligations and that such breach can cause the Company serious harm,	
 
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 	for which you agree to pay the Company an indemnity for at least THREE MONTHS of your Gross Salary, without there being the need for the Company to prove its damages due to your violation. You agree that this penalty is additional to the Company’s right under Section of Indemnification, below.	
 
9.	INTELLECTUAL PROPERTY RIGHTS	
 
a)	You acknowledge that copyright and all other intellectual proprietary rights in any documents and other materials produced by you during the course of this Appointment or your performance of duties (whether or not produced during working hours), including without limitation your inventions, creations, work products or whatever forms of objects that may be protected under the Copyright Law, Patent Law, Trademark Law, Trade Secret Law or other laws of the relevant jurisdiction (“Products”) shall vest in and be owned by the Company.	
 
b)	You further agree that you will do all things necessary (at the Company’s request and expense) to perfect such vesting and ownership of such rights by the Company both during and after the period of this Appointment.	
 
c)	You ensure that such documents and other materials produced by you will be original and will not infringe the rights of any third party.	
 
10.	INDEMNIFICATION	
 
a)	You agree to indemnify and hold the Company harmless from all losses, liabilities, claims and damages (including lawyer’s fees) which may arise out of or as a result of any of your unauthorized act or any act caused by you in contravention of this Agreement.	
 
b)	Any payment according to the provision of this Agreement shall be without prejudice to the right the Company expressly reserves to engage proceedings against you in reparation for the financial and moral damage actually suffered by the Company.	
 
11.	TERMINATION	
 
a)	In the event either party intends to terminate this Agreement following the probationary period, other than for justifiable cause as described below, the terminating party shall give written notice to the other party at least 1 month prior to the desired date of termination; provided, however, that the Company may elect to give you payment in lieu of notice. Notwithstanding the foregoing, the Company may terminate this Agreement without notice or payment of any kind during the probationary period set forth in Section 1.	
 
b)	No advance notice is required in the event of the Company’s termination of the Agreement for justifiable cause, including without limitation, a breach of your obligations under this Agreement or the law and regulations of the relevant jurisdiction, provided that the specific reason and factual basis for such termination shall be communicated to you. Without limiting the general force of the previous paragraph, the Company may terminate this Agreement and your employment if you: (i) commit fraud,	
 
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 	dishonesty or serious misconduct; or (ii) commit a serious or persistent breach or neglect of your duties; or (iii) refuse or neglect to comply with any lawful order given to you by the Company; or (iv) commit misconduct inconsistent with the due and faithful discharge of your duties. The Company may also terminate this Agreement and your employment for any other reason that would justify termination under the laws of the Hong Kong SAR. Any delay by the Company in exercising any right of termination shall not constitute a waiver thereof.	
 
c)	Upon termination of employment, and without need of further notice or demand, you shall immediately transfer and deliver to the Company any property of the Company, Western Union HK and affiliated and related companies which may be in your possession, custody or under your control including, without limitation, all papers, documents, notes, memoranda, records and writings, in whatever form or stored in whatever media, which in any way relate to the business of the Company, Western Union HK and affiliated and related companies and/or to the business of the clients of the Company, Western Union HK and affiliated and related companies together with all extracts or copies thereof.	
 
12.	COMPANY RULES AND REGULATIONS	
 
Employment Discipline
 
a)	You agree to comply with the Company’s rules and policies as set forth in its Employee Handbook, including but not limited to its Code of Conduct, and other materials made available to you from time to time, as such may be amended or updated by the Company from time to time. You also agree to perform all aspects of your job in accordance with law, to strictly follow rules of safety and sanitation, to protect the property of the Company, to maintain the highest standards of personal and professional ethics, to actively participate in training arranged by the Company, and to continue to develop and improve your professional skills.	
 
b)	Any breach or failure to observe any conditions set forth in this Agreement may subject you to immediate dismissal without compensation, subject to the requirements of law. The Company will have the right to take other appropriate legal actions before or after that dismissal.	
 
c)	Your obligations under Sections 6,7,8,9, and 12 of this Agreement survive termination of your employment relationship with the Company.	
 
13.	EXECUTION AND LANGUAGE OF AGREEMENT	
 
a)	This Agreement is executed in two originals, with each party to retain one original. If there is any oral or written agreements between you and the Company existing prior to the Agreement, the Agreement shall supersede such prior agreements and such prior agreements shall not apply to this appointment. All matters shall be governed by this Agreement.	
 
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b)	If there is any translation of this Agreement in Chinese or other languages, the English version shall govern.	
 
14.	SEVERABILITY	
 
In the event that any provision of this letter becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this letter shall continue in full force and effect without said provision; provided that the Company reserves the right to determine whether such severability shall be effective if it materially changes the benefit of this letter to the Company.
 
15.	PROCESSING AND USE OF EMPLOYEE INFORMATION	
 
You agree that for employment and management purposes, your personal data will be processed, stored, maintained, and transferred between Company and any of the associated worldwide companies of First Data Corporation, and to third party service providers, according to business requirements. Your employee data will be kept secure and confidential in accordance with company policy and national legislation. Company will regularly update your data with your assistance. You will retain the right of access to your data and the right to have incorrect data corrected. Your acceptance of employment under the terms and conditions set forth in this Agreement also constitutes explicit consent by you to the Company’s collection, retention, and transmittal of your personal data, for all valid and appropriate purposes related to your employment by the Company.
 
16.	TAX LIABILITIES	
 
Other than as specifically provided elsewhere in this Agreement, the Company will not be responsible or liable for any of your tax or other liabilities in respect of your employment, such as personal income tax payable to any governments or authorities. You are solely responsible for filing any and all income tax returns and paying any amounts owed to the respective authorities in your relocation country or elsewhere. The Company will have the right to withhold your remuneration (or any part thereof) as may be required by law and pay the same on your behalf in order to settle any of your tax liabilities and penalties.
 
17.	GOVERNING LAW AND JURISDICTION	
 
a)	The execution, interpretation and enforcement of this Agreement and the respective rights and obligations of the parties shall be governed and construed in accordance with the laws of Hong Kong SAR.	
 
b)	Both parties shall submit to the jurisdiction of the Hong Kong courts in the event of a dispute relating to this Agreement.	
 
c)	This agreement contains and represents the entire agreement and understanding between you and the Company, and all of its affiliated companies, relating to your employment with the Company. This agreement supersedes all previous agreements, arrangements and any other discussions that you may have had with the Company, Western Union HK or with its affiliated and related companies relating to your employment. This agreement	
 
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 	may be altered only by a written agreement signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.	
 
Company
 
Western Union Hong Kong Limited
 
                                                                      [company chop]

		
by	 	/s/ George Graziadei	
	 	George Graziadei	
	 	Vice President, Executive Talent Acquisition	
 
**	Please acknowledge your acceptance of this offer of employment on the terms and conditions set forth in this Agreement by signing below and returning this letter to the Company:	
 
______________________________
 
/s/ Ian Marsh                                                [chop or signature]
 
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Addendum to Terms and Conditions of Employment Agreement
 
This Addendum is made this 12 th day of August, 2004 and supplements, modifies, and clarifies the terms of the Employment Agreement dated as of January 30, 2004, by and between Western Union Hong Kong Limited (the “Company”) and Ian Marsh (the “Employment Agreement”), and is intended to more closely conform the terms of the Employment Agreement to the original understanding and intent of the parties thereto.
 
Therefore
 
The clause 3 of the Employment Agreement ( Benefits (Non-Salary) – Housing Allowance) is amended to read as follows:
 
3.	Benefits (Non-Salary) – Housing Allowance	
 
In addition to your Base Salary set out in Section 1, the Company will also pay you a Housing Allowance of USD 14,341.91 per month during the term of your assignment in Hong Kong, up to a maximum of 24 months, which will be paid monthly. You may use this allowance to rent, lease, or purchase a dwelling place, but the Company shall in no event have any responsibility or ownership interest with respect to such dwelling. The Company may, at its discretion, make lease or rent payments directly to the landlord of such premises, and in such event the above-specified Housing Allowance will be reduced by the amount of any rent or lease payments made directly to the landlord by the Company. If the Company makes such direct payments, the excess of the above specified Housing Allowance over the amount of such direct payments, plus the amount of the Hong Kong tax gross up on such excess as calculated by the Company, will be paid to you monthly.
 
This Addendum constitutes an integral part of the Employment Agreement dated January 30, 2004.
 
Kindly acknowledge your acceptance and agreement by signing hereunder.

Yours faithfully,	 		 	Acknowledged and agreed by	
			
/s/ Martin Timmis	 		 	/s/ Ian Marsh	
Martin Timmis	 		 	Ian Marsh	
Vice President, Human Resources
Asia Pacific	 		 		
 
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Exhibit 21.1
 
LIST OF THE WESTERN UNION COMPANY SUBSIDIARIES
 
The following is a list of entities expected to be subsidiaries of The Western Union Company upon the effectiveness of the spin-off, along with each entity’s place of incorporation or organization.

Name of Company	  	Jurisdiction of Incorporation	
American Rapid Corporation	  	Delaware	
Angelo Costa Srl *	  	Italy	
Christopher C. Varvias & Assoc. Elect. MT S.A. *	  	Greece	
E Commerce Group Products Inc.	  	New York	
E Commerce Group, Inc.	  	New York	
FDI Merchant Services Holding CV	  	Netherlands	
FEXCO Group *	  	Ireland	
Finanzadirecto.com, Inc.	  	Georgia	
Finint Srl *	  	Italy	
First Data CashCard Acquisition Partnership	  	Australia	
First Data DSOS (Bermuda) Holding Finance Limited	  	Bermuda	
First Data DSOS Holding (Bermuda) Limited	  	Bermuda	
First Data DSOS Holding (Bermuda) Ltd. & Co. OEG	  	Austria	
First Data DSOS Management (Bermuda) Limited	  	Bermuda	
First Data (Hellas) International Holdings SA	  	Greece	
First Data Operations (UK) Ltd.	  	United Kingdom	
First Data POS Deutschland GbR	  	Germany	
First Financial Management Corporation	  	Georgia	
Global Money Transfers, Inc.	  	Delaware	
GMT Group, Inc.	  	Delaware	
Grant Financial Group, Inc.	  	California	
Grupo Dinámico Empresarial, S.A. de C.V.	  	Mexico	
LawNet, Inc.	  	New York	
LegalTech Inc.	  	New York	
Montvale Mortgage Associates, LLC	  	Delaware	
MT Global Holdings Limited	  	Bermuda	
MT Holding (Bermuda) Limited	  	Bermuda	
MT International Holdings Limited	  	Bermuda	
MT International Operations Limited	  	Bermuda	
MT International Operations Partnership	  	Bermuda	
MT Network Holdings Limited	  	Bermuda	
MT Processing Holdings Limited	  	Bermuda	
MT UK Holding Limited	  	United Kingdom	
MT Worldwide Holdings Limited	  	Bermuda	
Orlandi de Mexico S.A. de C.V.	  	Mexico	
Orlandi Valuta	  	California	
PayBills.com Inc.	  	New York	
Paymap Inc.	  	Delaware	
Servicio Electrónico de Pago S.A. *	  	Argentina	
Servicio Integral de Envios S. de R.L. de C.V.	  	Mexico	
Servicios de Apoyo GDE, S.A. de C.V.	  	Mexico	
Societe Financiere de Paiements SAS *	  	France	
SpeedPay, Inc.	  	New York	

			
Union del Oeste de Costa Rica S.A.	  	Costa Rica	
Vigo Check Cashing Corporation	  	New York	
Vigo Financial Services, LP	  	Delaware	
Vigo GP, Inc.	  	Delaware	
Vigo LP, Inc.	  	Delaware	
Vigo Remittance Corp.	  	Ontario	
Vigo Remittance Corp.	  	New York	
Vigo Telecommunications, Inc.	  	New York	
Western Union Benelux MT Limited	  	Ireland	
Western Union Chile Limitada	  	Chile	
Western Union Communications, Inc.	  	Delaware	
Western Union do Brasil Servicos e Participacoes Ltda.	  	Brazil	
Western Union Financial Holdings, L.L.C.	  	New York investment company	
Western Union Financial MT East	  	Russian Federation	
Western Union Financial Services (Argentina) SRL	  	Argentina	
Western Union Financial Services (Australia) Pty. Ltd.	  	Australia	
Western Union Financial Services (Belgium), SPRL	  	Belgium	
Western Union Financial Services (Canada), Inc.	  	Ontario	
Western Union Financial Services Eastern Europe LLC	  	Delaware	
Western Union Financial Services International (France) Sarl	  	France	
Western Union Financial Services GmbH	  	Germany	
Western Union Financial Services GmbH	  	Austria	
Western Union Financial Services (Hong Kong) Limited	  	Hong Kong	
Western Union Financial Services (Italy) Srl	  	Italy	
Western Union Financial Services (Korea) Inc.	  	Korea	
Western Union Financial Services Overseas, Inc.	  	Delaware	
Western Union Financial Services, Inc.	  	Colorado	
Western Union GB Limited	  	United Kingdom	
Western Union Global Network PTE LTD *	  	Singapore	
Western Union Holdings, Inc.	  	Georgia	
Western Union International Bank GmbH	  	Austria	
Western Union International Headquarters SARL	  	France	
Western Union International Limited	  	Ireland	
Western Union Italy Holdings Srl	  	Italy	
Western Union, LLC	  	Colorado	
Western Union Morocco SARL	  	Morocco	
Western Union Network Co. (Canada)	  	Nova Scotia	
Western Union Network SAS	  	France	
Western Union Network Limited	  	Ireland	
Western Union Northern Europe GmbH	  	Germany	
Western Union Online Limited	  	Ireland	
Western Union Overseas Limited	  	Ireland	
Western Union Processing Limited	  	Ireland	
Western Union Services Inc.	  	Maryland	
Western Union Services India Private Ltd.	  	India	
Western Union Services Singapore Pte. Ltd.	  	Singapore	
 
*	not wholly owned	
 
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Exhibit 99.1

Dear First Data Stockholder:
 
I am pleased to inform you that on [•], 2006, the company’s Board of Directors approved the spin-off of Western Union, a wholly-owned subsidiary that is a leader in the global money transfer business.
 
The spin-off of Western Union is scheduled to occur on [•], 2006. Holders of record of shares of First Data common stock as of the close of business on September [•], 2006, which will be the record date, will receive one share of Western Union common stock for each share of First Data common stock held. No action is required on your part to receive shares of Western Union. You will not be required to pay anything for the new shares or to surrender any First Data shares. Because Western Union shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in Western Union.
 
We believe that the separation of Western Union from First Data will provide a better structure for each company to pursue the most appropriate long-term growth opportunities and business strategies by allowing it to focus on its own distinct businesses, opportunities and markets. First Data will continue to provide business customers with leading, innovative electronic commerce and payment solutions, while Western Union will build on its position as the trusted source for consumers around the world to transfer money and pay bills rapidly, reliably and conveniently.
 
Following the spin-off, First Data’s common stock will continue to trade on the New York Stock Exchange under the symbol “FDC.” Western Union has applied to have its common stock authorized for listing on the NYSE under the symbol “WU.”
 
We intend for the spin-off to be tax-free for all stockholders. To that end, we have requested a favorable ruling from the Internal Revenue Service with respect to the spin-off, and intend to complete the spin-off only if we receive the favorable ruling and a favorable opinion of counsel confirming the spin-off’s tax-free status. The spin-off is also subject to other conditions, including necessary regulatory approvals.
 
I encourage you to read the enclosed information statement, which is being provided to all First Data stockholders. It describes the spin-off in detail and contains important business and financial information about Western Union.
 
I look forward to your continued support as a stockholder of First Data. We remain committed to working on your behalf to build long-term stockholder value.
 
Sincerely,
 
Ric Duques
Chairman and Chief Executive Officer
First Data
[•], 2006

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Dear Western Union Stockholder:
 
It is our great pleasure to welcome you as a stockholder of Western Union.
 
The Western Union Company has roots back to 1851 and first traded on the New York Stock Exchange in 1865. For 150 years, we have been providing innovative services, including creating the universal stock ticker and launching the first United States commercial communications satellite service. We introduced our consumer-to-consumer money transfer service in 1871 and today offer these services under the Western Union, Orlandi Valuta and Vigo brands. We began offering consumer-to-business payment services in 1989 when we introduced Western Union Quick Collect, providing consumers in the United States with convenient walk-in access to our agent network to pay bills in cash.
 
Since First Data acquired us in 1995, we have become a leader in global money transfer, with a vast, diversified distribution network consisting of over 270,000 agent locations in more than 200 countries and territories. We believe that the size and reach of this network, our brand strength, and the convenience and reliability we bring to our consumers have been the key to the growth of our business as well as our strong financial performance.
 
We are very excited about our prospects and believe we will be even better positioned to realize the significant growth opportunities for our business as an independent company. Looking forward, we intend to continue to execute our successful strategies of expanding and diversifying our global distribution, building our brand and enhancing our consumers’ experiences, developing consumer convenience and choice, and exploring new service offerings.
 
We have applied to have Western Union common stock authorized for listing on the New York Stock Exchange under the symbol “WU.”
 
We invite you to learn more about our company by reading the enclosed information statement. We thank you in advance for your support as our business begins a new and exciting chapter in its long and successful history.
 
Sincerely,
 
Christina A. Gold	Jack M. Greenberg	
Chief Executive Officer	Non-Executive Chairman	
Western Union	Western Union	
[•], 2006		

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Preliminary Information Statement
(Subject to Completion, Dated August 28, 2006)
 
INFORMATION STATEMENT

 
Common Stock
 
(Par Value $0.01 Per Share)
 
First Data Corporation is providing this information statement to you as a stockholder of First Data in connection with the spin-off of The Western Union Company. The spin-off will consist of a series of transactions by which First Data will contribute its money transfer and consumer payments businesses to Western Union, which we refer to as the contribution, and distribute to its stockholders of record all of the outstanding shares of Western Union common stock, which we refer to as the distribution.
 
First Data expects that the distribution will be made on [ · ], 2006 on a pro rata basis to the holders of record of First Data common stock on September [ · ], 2006, which we refer to as the record date. If you are a holder of record of First Data common stock at the close of business on the record date, you will receive one share of Western Union common stock for each share of First Data common stock you hold on that date. As discussed under “The Spin-Off—Trading of First Data Common Stock After the Record Date and Prior to the Distribution,” if you sell your shares of First Data common stock in the “regular way” market after the record date and prior to the spin-off, you also will be selling your right to receive shares of Western Union common stock in connection with the spin-off. A book-entry account statement reflecting your ownership of shares of Western Union common stock will be mailed to you, or your brokerage account will be credited for the shares, on or about [ · ], 2006. Because Western Union shares will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in Western Union.
 
First Data has requested a favorable tax ruling from the United States Internal Revenue Service with respect to the spin-off.
 
You will not be required to make any payment for the shares of Western Union common stock that you will receive in connection with the spin-off, nor will you be required to surrender or exchange your shares of First Data common stock or take any other action in order to receive shares of Western Union common stock in connection with the spin-off. No approval by First Data stockholders of the spin-off is required or being sought. You are not being asked for a proxy and you are requested not to send a proxy.
 
There is no current trading market for Western Union common stock. However, we expect that a limited market, commonly known as a “when-issued” trading market, for Western Union common stock will begin on or about September [ · ], 2006, and we expect that “regular way” trading of Western Union common stock will begin the first day of trading following the spin-off. We have applied to have Western Union common stock authorized for listing on the New York Stock Exchange under the symbol “WU.”
 
In reviewing this information statement, you should carefully consider the risks under “ Risk Factors ” beginning on page 15 of this information statement.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
 
This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.
 
The date of this information statement is [ · ], 2006.

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 TABLE OF CONTENTS

SUMMARY	  	1	
		
RISK FACTORS	  	15	
		
FORWARD-LOOKING STATEMENTS	  	29	
		
THE SPIN-OFF	  	30	
		
DIVIDEND POLICY	  	38	
		
FINANCING	  	39	
		
CAPITALIZATION	  	40	
		
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS	  	41	
		
SELECTED HISTORICAL COMBINED FINANCIAL DATA	  	48	
		
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	  	50	
		
OUR BUSINESS	  	76	
		
OUR RELATIONSHIP WITH FIRST DATA AFTER THE SPIN-OFF	  	92	
		
OUR MANAGEMENT	  	105	
		
EXECUTIVE COMPENSATION	  	113	
		
OWNERSHIP OF OUR STOCK	  	123	
		
DESCRIPTION OF OUR CAPITAL STOCK	  	124	
		
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	  	126	
		
CERTAIN ANTI-TAKEOVER EFFECTS OF PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS	  	127	
		
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OUR DIRECTORS
AND OFFICERS	  	130	
		
2007 ANNUAL MEETING OF STOCKHOLDERS	  	130	
		
WHERE YOU CAN FIND MORE INFORMATION	  	131	
		
INDEX TO COMBINED FINANCIAL STATEMENTS AND SCHEDULE	  	F-1	
 
In this information statement, unless the context otherwise requires:
 
 	•	 	“Western Union,” “we,” “our,” “us” and “our company” refer to The Western Union Company, a Delaware corporation, and its subsidiaries, for all periods following the spin-off; and	
 
 	•	 	“First Data” refers to First Data Corporation, a Delaware corporation, and its subsidiaries, other than, for all periods following the spin-off, Western Union.	
 
We describe in this information statement the businesses to be transferred to us by First Data in connection with the spin-off as though the transferred businesses were our business for all historical periods described. However, The Western Union Company is a newly formed entity that has not conducted any operations prior to the spin-off. References in this information statement to the historical assets, liabilities, products, businesses or activities of our businesses are intended to refer to the historical assets, liabilities, products, businesses or activities of the transferred businesses as those businesses were conducted as part of First Data prior to the spin-off. Following the spin-off, we will be an independent, publicly traded company, and First Data will have no continuing stock ownership in us. Our historical combined financial information as part of First Data contained in this information statement is not necessarily indicative of our future financial position, future results of operations or future cash flows, nor does it reflect what our financial position, results of operations or cash flows would have been had we been operated as a stand-alone company during the periods presented.
 
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This information statement is being furnished solely to provide information to First Data stockholders who will receive shares of Western Union common stock in connection with the spin-off. It is not provided as an inducement or encouragement to buy or sell any securities. You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information.
 
Trademarks, Service Marks and Trade Names
 
We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks and service marks that we own or have rights to use that appear in this information statement include the WESTERN UNION ® , VIGO SM , ORLANDI VALUTA ® , WESTERN UNION QUICK COLLECT ® , SPEEDPAY ® and PAYMAP ® marks. The trademarks are registered in the United States and other jurisdictions. Each trademark, trade name or service mark of any other company appearing in this information statement is owned by such company.
 
Industry Data
 
This information statement includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys and other independent sources available to us. Some data also are based on our good faith estimates, which are derived from management’s knowledge of the industry and from independent sources. The primary sources for third-party industry data and forecasts are Aite Group, LLC, or “Aite,” the United Nations, the World Bank and other industry reports and articles. These third-party publications and surveys generally state that the information included therein is believed to have been obtained from sources believed to be reliable, but that the publications and surveys can give no assurance as to the accuracy or completeness of such information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions on which such data are based. Similarly, we believe our internal research is reliable, even though such research has not been verified by any independent sources.
 
Company Information
 
The Western Union Company was incorporated in Delaware in February 2006. Our principal executive offices are located at 12500 East Belford Avenue, Englewood, Colorado 80112. Our main telephone number is (303) 967-6756.
 
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 SUMMARY
 
The following summary contains certain information from this information statement relating to us and the spin-off. It does not contain all the details concerning us or our spin-off from First Data, including information that may be important to you. To understand our business and financial position and the spin-off, you should carefully review this entire information statement.
 
Our Company
 
Western Union, a leader in global money transfer, provides people with fast, reliable and convenient ways to send money around the world, pay bills and purchase money orders. The Western Union brand is globally recognized. Our services are available through a network of over 270,000 agent locations that offer Western Union services in more than 200 countries and territories. Each location in our agent network is capable of providing one or more of our services. As of June 30, 2006, approximately 75% of our locations had experienced money transfer activity in the prior twelve months. Our consumer-to-consumer money transfer service enables people to send money around the world in minutes. Our consumer-to-business service provides consumers with flexible and convenient options for making one-time or recurring payments.
 
In 2005, we generated $4.0 billion in total combined revenues and $927.4 million in combined net income. Demand for our services has steadily increased over the past several years. Our consumer-to-consumer transactions grew at a compound annual growth rate of 21% from 2001 to 2005. We handled 119 million consumer-to-consumer money transfers in 2005, an increase of 23% over 2004. Our 215 million consumer-to-business transactions in 2005 represented a 12% increase over 2004.
 
We believe that brand strength, the size and reach of our global network, convenience and reliability for our consumers have been key to the growth of our business. As we continue to meet the needs of our consumers for fast, reliable and convenient money transfer services, we are also working to enhance our existing services and provide our consumers with broad access to an expanding portfolio of payment and other financial services.
 
The Western Union Business
 
The Western Union business model is straight-forward. Our revenue is principally generated by money transfer and payment transactions. We derive our revenue primarily from two sources. Most of our revenue comes from fees that consumers pay when they send money. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency.
 
We operate primarily in two business segments.
 
 	•	 	In our consumer-to-consumer segment we provide our third-party agents with our multi-currency, real-time money transfer processing systems used to originate and pay money transfers. Our agents provide the physical infrastructure and staff required to complete the transfers. We generally pay our agents a commission based on a percentage of revenue. The commission is shared between the agent that initiated the transaction, the “send agent,” and the agent that paid out the transaction, the “receive agent.” For most agents, the costs of providing the physical infrastructure and staff are typically covered by the agent’s primary business (e.g., postal services, banking, check cashing, travel and retail businesses), making the economics of being a Western Union agent attractive to our agents. Western Union’s global reach and loyal consumer base allow us to attract agents we believe to be high quality. We take little credit risk associated with consumer delinquency, because the vast majority of our transactions are initiated in cash.	
 
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 	•	 	In our consumer-to-business segment we offer consumers the option to make consumer-to-business payments electronically over the telephone or the Internet or cash payments in person at an agent location. We process electronic payments using the consumer’s credit card, debit card or bank account. We process cash payments much like we process consumer-to-consumer transactions.	
 
Our Strengths
 
We believe our strengths position us to continue as the provider of choice for millions of consumers when they send money. Our strengths include our:
 
Strong relationships with high quality agents and businesses . We interact with millions of consumers around the world primarily through our global agent network. Our agents facilitate the global distribution and convenience that help define our Western Union brand, which in turn helps create demand for our services and helps us to recruit and retain agents. Our agents tend to be established organizations that provide an array of other consumer products and services, including postal services, groceries, banking, check cashing, travel and other daily necessities. Many are open during nontraditional banking hours, such as nights and weekends, making it easier for consumers to use our services. Although our agent contracts are generally for 5 year terms, our top 40 agents globally have been with us an average of more than 12 years; in 2005, these agents generated approximately 50% of our consumer-to-consumer combined revenues.
 
We have strong relationships with a number of businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies (all sometimes referred to as “billers”). These relationships are a core component of our consumer-to-business payment services. On average, we have provided bill payment services for our top 20 billers for more than 10 years.
 
Global distribution network . The Western Union ® , Orlandi Valuta ® and Vigo SM agent networks are the foundation of our international presence. Our agent locations include more than 5,000 offering Orlandi Valuta ® branded service and approximately 20,000 offering Vigo SM branded service, with the remainder offering Western Union branded service. A small number offer service under two or three brands. Our global footprint is based on more than a decade of building relationships with agents worldwide.
 
Success in the consumer-to-consumer money transfer business depends in large part on providing quality service at convenient send and receive locations. Our global network, extending to over 200 countries and territories, provides that convenience. We have emphasized the development of our receive network around the world over the last five years to align the supply of agent locations in the markets that primarily send transactions with those that pay them. Today, we believe we are well-positioned in key receive markets, such as China and India, to meet consumer demand as it evolves with shifts in migration patterns.
 
To complement the convenience offered by our network’s global physical locations, in certain countries we have made our services available through other channels, such as our Internet service, westernunion.com, which allows consumers to send funds through our website, our telephone money transfer service and our direct-to-bank money transfer service, which allows consumers to send money directly to a bank account.
 
Established brands . Our Western Union ® brand is built on a foundation of more than a century of history and consumer-focused service. Our consumers have told us that they believe the Western Union brand represents speed, reliability, trust, value and convenience. In the United States, where the brand has existed the longest, there is a very high level of brand awareness among money transfer users. The international expansion of our agent network over the past decade has made the Western Union brand visible today virtually everywhere consumers send and receive money. We are building the level of awareness in Europe and Asia. As people move and travel around the world, they are able to find a well recognized service to send funds to others.
 
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We also offer money transfer services under the Orlandi Valuta ® and Vigo SM brands. Over the past three years, Western Union branded transactions have grown the fastest of the three brands. Through our Western Union Quick Collect brand, as well as our Speedpay brand, we offer cash-based and electronic consumer-to-business payment services.
 
Our operating results over the past several years have allowed us to invest significantly each year to support our brands. In 2005, we invested more than $270 million to market, advertise and promote our services and our agents made significant additional investments.
 
Consumer relationships . One of our strengths has been our focus on our consumers and offering them fast, reliable money transfer services. Our global loyalty card program, offered for both consumer-to-consumer and consumer-to-business services, is available in a growing number of countries. We launched our Gold Card, the principal feature of the program, in the United States in 2002. As of June 30, 2006, the loyalty program was available in 58 countries and had more than 6.5 million active cards, primarily in the United States. The Gold Card offers consumers faster service at the point-of-sale, rewards such as free telephone time and service enhancements including, on a pilot basis in select markets, remittance protection insurance. On average, a Gold Card consumer initiates more transactions and has a higher rate of retention than a non-carded consumer. In the United States more than 30% of consumer-to-consumer transactions are completed using a Gold Card. We are also seeing increases in usage in Europe and Asia where we began offering the Gold Card in 2004.
 
Operational excellence . An important part of operational excellence is steadfastly reliable technology. Our systems enable us to provide worldwide, multi-currency and real-time money transfer processing with a high degree of reliability. We provide dynamic computer host-to-host interfaces to our agents and billers that enable them to offer money transfer and payment services within their own computer environment. We also provide settlement and reconciliation software to our agents and billers with reporting and analysis tools to help them monitor many aspects of their money transfer business, including transactions, profitability and cash flow. Behind the scenes, our settlement systems facilitate the periodic settlement of accounts between our company and our agents and billers. Our systems and processes enable our agents to pay money transfers in over 120 currencies.
 
Flexibility is another important component of operational excellence. We continue to work to implement consumer focused enhancements to our services. These efforts have resulted in offerings like telephone and Internet services, and money transfers paid directly to a bank account or to a stored-value card.
 
Attractive financial profile . While we expect to incur significant amounts of debt in connection with the spin-off, our significant revenue and net cash flow will provide us with opportunities to invest in our core business growth, in new services and in new markets. In 2005, we generated $4.0 billion in combined revenues and over $1.0 billion in combined net cash provided by operating activities. Our combined revenues have grown at a compound annual growth rate of 15% since 2001.
 
Experienced management team . Our management team is substantially the same team that managed the Western Union business for First Data before the spin-off. Business leaders at the senior management level and below were involved in Western Union’s global expansion and creating and implementing our long-term strategy. Collectively, members of our executive team have an average of 8 years with us or First Data.
 
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Our Strategy
 
We believe that our strengths position us well to continue to pursue global markets and remain focused on our consumers and their needs. To do so, we developed a number of strategies, including:
 
Expand and diversify global distribution . We intend to continue to identify and create opportunities to generate new revenue from our existing distribution channels, including through acquisitions and by equity investments in our agents. We are focused on selectively expanding our agent network and relationships with billers.
 
Our strategy is to align the number of send and receive agent locations in our markets to correspond to the send and receive demands of our consumers in each market. We have focused on building receive networks in countries with large inbound remittance markets, particularly in Latin America, Africa and eastern Europe, as well as key countries like China, India and elsewhere in Asia. This increased presence in receive markets provides immigrants from these countries confidence that money they send home will be delivered to a convenient location they know. In the United States, western Europe and other predominantly send markets, we add agent locations in locales that tend to attract immigrants. While we continue to develop our global network, we expect the majority of our growth in the future to come from existing locations.
 
Today, we offer cash-based bill payment services primarily in the United States, and we offer consumer-to-business payment services to and from other countries served by our agent network. We intend to pursue continued global expansion of cash and electronic consumer-to-business payments services through our existing agent network and other channels.
 
Build our brands and enhance our consumers’ experience. We remain focused on our brands and make sizable investments to build our brands and enhance our consumers’ experience. In each of the last three years, we have spent approximately 7% of our combined revenues on marketing, including advertising, events, loyalty programs and employees dedicated to marketing activities. In addition, in each of the last three years we invested in consumer-to-consumer pricing decreases designed to meet consumer needs, maximize market opportunities and strengthen our overall competitive positioning. Building our brands and enhancing the consumer experience are strategies that are grounded in our global consumer relationship management, or “CRM,” programs, which emphasize building a lifetime relationship with our consumers and their families. The Western Union Gold Card is a key part of this strategy.
 
Develop consumer convenience and choice . We focus our product development strategy on providing money transfer services that meet consumers’ needs for convenience, choice and control. Our Internet service (westernunion.com), Telephone Money Transfer (a service that allows consumers to speak with Western Union operators in a number of languages by phone to send funds), Money Transfer by Phone (a service that allows consumers to speak with Western Union operators in a number of languages by phone from agent locations to send funds), Direct to Bank (a service that allows consumers to send funds directly to a bank account), Account to Cash (a service that allows consumers to debit their bank accounts and send the money through Western Union for payment at any agent location), Home Delivery of remittances (a service that allows funds to be delivered to the recipient rather than picked up at an agent location) and Western Union@ATM (a service that allows consumers to transfer funds to or from an ATM) are all examples of service enhancements that address our consumers’ needs. We intend to continue to develop these types of enhancements, building on insights from our agents and the knowledge we gain from CRM activities.
 
In the United States, we offer consumers the ability to send payments to billers through a variety of channels, including walk-in locations, telephone service, interactive voice response units, or “IVR,” and Internet-based service. In order to pay their bills through these channels, consumers can use various means of payments—checks, credit cards, debit cards or cash. We intend to increase our consumer payments business in the United States by pursuing existing and emerging electronic payments services and technologies. Equally as important, we plan to expand this business outside the United States in ways that will vary from market to market.
 
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Explore new service offerings . Western Union is exploring new ways to bring additional services to our consumers around the world. For example, Western Union International Bank, based in Vienna, Austria, has the ability to establish branches and offer money transfer and other financial services directly to consumers in each of the 25 member states of the European Union. We continue to investigate new services—either offered by our company directly or through third parties—that are meaningful to our large consumer base.
 
Reasons for the Spin-Off
 
First Data and we believe that the spin-off of our business from First Data will provide several opportunities and benefits that are expected to enhance stockholder value, including the following:
 
 	•	 	providing each company with enhanced business focus on its own distinct business opportunities, markets and challenges;	
 
 	•	 	allowing us greater capital flexibility and direct access to capital markets;	
 
 	•	 	allowing us to link our employees’ compensation more directly with our financial performance;	
 
 	•	 	allowing us the ability to provide our services without being restrained by the conflicts doing so may create with First Data’s clients; and	
 
 	•	 	allowing the investment community to invest separately in each company.	
 
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Questions and Answers About the Spin-Off

 How will the spin-off work?	  	The spin-off will be accomplished through a series of transactions by which First Data will contribute to us its money transfer and consumer payments businesses, which we refer to as the contribution, and distribute to its stockholders of record all of the outstanding shares of our common stock, which we refer to as the distribution. For additional information on the transactions in the spin-off, see “The Spin-Off—Manner of Effecting the Spin-Off” beginning on page [•].	
		
What other transactions are occurring with the spin-off?	  	We expect that in connection with the spin-off, and in consideration for the contribution, we will transfer to First Data:
•      approximately $[•] million in cash, which will be financed;
•      notes with an aggregate principal amount of at least $800 million and a maturity of at least 10 years, which we refer to as the exchange notes, and which notes First Data expects to exchange with investment banks for indebtedness of First Data held by the investment banks and subsequently sold by the investment banks in a public or private offering; and
•      shares of our common stock sufficient to effect the distribution.
 
In addition, two days prior to the distribution date, our subsidiary, First Financial Management Corporation, or FFMC, will pay a dividend to First Data in the form of a promissory note in an aggregate principal amount of approximately $[•] billion. We expect that FFMC will repay this promissory note on the distribution date or shortly thereafter with borrowings under a 364 day bridge loan facility it will enter into on or shortly after the distribution date. The Western Union Company is considering and, subject to market and other conditions following the spin-off, expects to refinance the amounts borrowed by FFMC under the bridge loan with proceeds from debt The Western Union Company will issue or amounts The Western Union Company will otherwise borrow following the distribution date. However, we do not have any agreements or arrangements with any financial institution or other third parties with respect to any such refinancing and there can be no assurance that The Western Union Company will be able to refinance the borrowings under the FFMC bridge loan.
 
As a result of the transactions described above, following the spin-off we expect to have approximately $3.6 billion in combined indebtedness. For	
	  	additional information regarding the financing, see “Financing” on page [•].
We expect that substantially all of the intercompany note balances in our historical combined balance sheets will be settled in cash as of the date of the spin-off. The net funding for the intercompany notes receivable from First Data was generated from earnings through our international operations and we expect to reinvest these earnings outside of the United States indefinitely. We anticipate that the other intercompany balances owed by First Data to us on the date of the spin-off will be forgiven, which will be treated as a dividend to First Data for accounting and tax purposes. For additional information on the settlement of these intercompany balances, see “Unaudited Pro Forma Combined Financial Statements” beginning on page [•].	
 
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What will our relationship with First Data be after the spin-off?	  	First Data and Western Union each will be independent, publicly traded companies. However, we will enter into agreements with First Data that will ease our transition into an independent, publicly traded company following the spin-off. These agreements will also allocate responsibility for obligations arising before and after the spin-off, including, among others, obligations relating to our employees and taxes. For example, we will enter into an agreement with Integrated Payment Systems Inc., or “IPS,” a subsidiary of First Data, that will permit us to continue to conduct our money order business. For additional information on our relationship with First Data after the spin-off, see “Our Relationship with First Data After the Spin-Off” beginning on page [•].	
		
When will the spin-off be completed?	  	First Data expects to complete the spin-off by distributing shares of our common stock on [•], 2006 to holders of record of First Data common stock on the record date. As discussed under “The Spin-Off—Trading of First Data Common Stock After the Record Date and Prior to the Distribution,” if you sell your shares of First Data common stock in the “regular way” market after the record date and prior to the spin-off, you also will be selling your right to receive shares of our common stock in connection with the spin-off. For additional information on the spin-off, see “The Spin-Off—Results of the Spin-Off” beginning on page [•].	
		
What is the record date for the distribution?	  	September [•], 2006.	
		
What do I have to do to participate in the distribution?	  	Nothing. You are not required to take any action to receive shares of our common stock in the spin-off. No vote of First Data stockholders will be taken for the spin-off. If you own shares of First Data common stock as of the close of business on the record date and do not sell those shares in the “regular way” market prior to the spin-off, a book-entry account statement reflecting your ownership of shares of our common stock will be mailed to you, or your brokerage account will be credited for the shares, on or about September [•], 2006. Do not mail in First Data common stock certificates in connection with the spin-off.	
		
How many shares of your common stock will I receive?	  	First Data will distribute one share of our common stock for each share of First Data common stock you own of record as of the close of business on the record date and do not sell in the “regular way” market prior to the spin-off. Based on approximately [•] shares of First Data common stock that we expect to be outstanding on the record date, First Data will distribute a total of approximately [•] shares of our common stock. For additional information on the distribution, see “The Spin-Off—Results of the Spin-Off” beginning on page [•].	
		
What is book-entry?	  	The book-entry system allows registered stockholders to hold their shares without physical stock certificates. We will not issue physical stock certificates, even if requested. For additional information, see “The Spin-Off—Manner of Effecting the Spin-Off” beginning on page [•].	
		
Is the spin-off taxable for United States federal income tax purposes?	  	First Data expects to receive (i) a private letter ruling from the Internal Revenue Service and (ii) an opinion of Sidley Austin LLP (or other nationally recognized tax counsel), in each case to the effect that the spin-off will be tax-free to First Data, us and First Data’s stockholders. See “The Spin-Off—Important Federal Income Tax Consequences” beginning	
 
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	  	on page [•] for a more detailed discussion of the United States federal income tax consequences of the spin-off to First Data stockholders.	
		
How will the spin-off affect my tax basis in First Data common stock?	  	Assuming that the spin-off is tax-free to First Data’s stockholders, your tax basis in the First Data common stock held by you immediately prior to the distribution will be allocated between such First Data common stock and our common stock received in the distribution in proportion to the relative fair market values of each on the date of the distribution. See “The Spin-Off—Important Federal Income Tax Consequences” beginning on page [•] for a more detailed description of the effects of the spin-off on your tax basis in First Data common stock and our common stock.	
		
What will happen to First Data stock options, restricted shares and restricted stock units?	  	We currently expect that, subject to approval of the First Data compensation and benefits committee, equity compensation awards will be treated as follows:
 
•      Current and former employees and directors of First Data who do not become employees or directors of Western Union will have each of their existing First Data stock options replaced with an adjusted First Data stock option with an adjusted exercise price and a substitute Western Union stock option. Both options, when combined, will preserve the intrinsic value of the existing First Data option, and each will preserve the ratio of the exercise price to the fair market value of the stock subject to the option.	
	  	•      Each First Data stock option held by a person who is or will be an employee or director of Western Union immediately after the spin-off will be replaced with a substitute option to purchase Western Union common stock that will preserve the intrinsic value of the option and the ratio of the exercise price to the fair market value of the stock.
 
•      Holders of First Data restricted stock who do not become employees or directors of Western Union will receive Western Union restricted stock in connection with the spin-off based on the number of shares of First Data restricted stock they hold.	
	  	•      The restricted stock awards of persons who are or will be employees or directors of Western Union immediately after the spin-off will be replaced with substitute Western Union restricted stock awards.	
	  	•      Current and former employees and directors of First Data who do not become employees or directors of Western Union will have
their First Data restricted stock units adjusted to represent both First Data restricted stock units and Western Union restricted stock units. First Data employees and directors who become Western Union employees or directors will have their First Data restricted stock units replaced with substitute Western Union restricted stock units.	
	  	 
For additional information on the treatment of First Data equity compensation awards, see “Our Relationship with First Data After the Spin-Off—Employee Matters Agreement” beginning on page [•].	
		
Do you intend to pay dividends on your common stock?	  	It is currently contemplated that following the spin-off, we will pay a cash dividend on our common stock with respect to the first full fiscal quarter	
 
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	  	following the date the spin-off is completed in an amount to be determined prior to the spin-off. The declaration and amount of future dividends, however, will be determined by our board of directors and will depend on our financial condition, earnings, capital requirements, legal requirements, regulatory constraints, industry practice and any other factors that our board of directors believes are relevant. See “Dividend Policy” on page [•] for additional information on our dividend policy following the spin-off.	
		
Where will I be able to trade your shares of common stock?	  	There is no current trading market for our common stock. We have applied to have our common stock authorized for listing on the New York Stock Exchange under the symbol “WU.” We expect that a limited market, commonly known as a “when-issued” trading market, for our common stock will begin on or about September [•], 2006. The term “when-issued” means that shares can be traded prior to the time shares are actually available or issued. We expect that on the first trading day following the spin-off, “when-issued” trading in our common stock will end and “regular way” will begin. “Regular way” trading refers to trading after a security has been	
	  	issued and typically involves a transaction that settles on the third full business day following the date of a trade. Shares of our common stock generally will be freely tradable following the spin-off. For additional information regarding the trading of our common stock, see “The Spin-Off—Market for Our Common Stock; Trading of Our Common Stock Prior to the Spin-Off” beginning on page [•].	
		
Will the number of First Data shares I own change as a result of the spin-off?	  	No. The number of shares of First Data common stock you own will not change as a result of the spin-off.	
		
What will happen to the listing of First Data common stock?	  	Nothing. First Data common stock will continue to be traded on the New York Stock Exchange under the symbol “FDC.”	
 
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Who do I contact for information regarding you and the spin-off?	  	Before the spin-off, you should direct inquiries relating to the spin-off to:	
		
	  	First Data Corporation
6200 South Quebec Street
Greenwood Village, Colorado 80111
Attention: Investor Relations Department
(303) 967-6756	
		
	  	After the spin-off, you should direct inquiries relating to our common stock to:	
		
	  	The Western Union Company
12500 East Belford Avenue
Englewood, Colorado 80112
Attention: Investor Relations Department	
		
	  	After the spin-off, the transfer agent and registrar for our common stock will be:	
		
	  	Wells Fargo Bank Minnesota, National Association
161 North Concord Exchange
South St. Paul, Minnesota 55075
(651) 450-4064	
 
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Summary Historical Data and Unaudited Pro Forma Combined Financial Data
 
The following tables set forth our summary historical data and unaudited pro forma financial data prepared on a combined basis. The historical data present our business as it has historically been operated by First Data. You should read the information set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Combined Financial Statements” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement. The statements of income and cash flow data for the years ended December 31, 2005, 2004 and 2003 and the balance sheet data as of December 31, 2005 and 2004 set forth below are derived from our audited combined financial statements included elsewhere in this information statement. The statements of income and cash flow data for the years ended December 31, 2002 and 2001 and the balance sheet data as of December 31, 2003, 2002 and 2001 set forth below are derived from our unaudited combined financial statements not included in this information statement. The statements of income and cash flow data for the six-month periods ended June 30, 2006 and 2005 and the balance sheet data as of June 30, 2006 set forth below are derived from our unaudited combined financial statements included elsewhere in this information statement. The balance sheet data as of June 30, 2005 set forth below are derived from our unaudited combined financial statements not included in this information statement. The unaudited interim combined financial statements are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2006. However, in the opinion of management, the unaudited interim combined financial statements include all adjustments (consisting of normal recurring accruals) that are necessary for the fair presentation of the results for the interim periods. See “Index to Combined Financial Statements and Schedule.”
 
The summary historical combined financial data below reflect the restatement of our historical combined financial statements to account for changes in the fair value of our foreign currency forward contracts in the combined statements of income rather than accumulated other comprehensive income (loss) pursuant to SFAS No. 133, and to correct the translation of certain euro denominated notes receivable from affiliates and record the change in fair value of related foreign currency swap agreements with First Data, which will be settled in connection with the spin-off.
 
Our historical financial, pro forma and other data included in this information statement are not necessarily indicative of our future financial position, future results of operations or future cash flows, nor do they reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented.
 
The unaudited pro forma combined financial data are derived from our unaudited pro forma combined financial statements. Our unaudited pro forma combined financial statements are derived from our historical combined financial statements and adjusted to give effect to the following transactions:
 
 	•	 	The contribution by First Data to us of specified assets related to First Data’s money transfer and consumer payments businesses and the assumption by us of specified liabilities related to such businesses.	
 
 	•	 	The issuance by us to First Data, in consideration for the contribution, of 765.2 million shares of our common stock.	
 
 	•	 	The distribution of 765.2 million shares of our common stock to holders of First Data common stock.	
 
 	•	 	The assumed incurrence of $3.6 billion of combined indebtedness in connection with the spin-off and the payment to First Data of $3.6 billion in the form of a combination of cash and our debt securities. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.	
 
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 	•	 	The assumed cash settlement of $778.8 million of intercompany notes and related accrued interest of $32.4 million owed by First Data to us and $52.2 million of intercompany notes and related accrued interest of $2.2 million owed by us to First Data. We will also pay First Data $16.8 million to settle certain foreign currency swap agreements with First Data related to certain notes receivable with affiliates on the date of spin-off.	
 
 	•	 	The forgiveness by us of $153.8 million of intercompany balances owed by First Data to us, and the forgiveness by an affiliate of First Data of an intercompany note owed by us to that affiliate of $11.3 million, which collectively will be treated as a net dividend to First Data for accounting and tax purposes.	
 
 	•	 	Estimated incremental costs associated with operating as a stand-alone company of $60 million annually.	
 
The share numbers are based on First Data share numbers as of June 30, 2006, and the dollar and settlement amounts are based on our balances as of June 30, 2006.
 
Our unaudited pro forma combined statements of income do not include adjustments for certain other costs of operating as a stand-alone company which we estimate, subject to the finalization of our plans, to be between $5 million and $15 million annually, including higher corporate branding and global affairs, information technology, procurement and other expenses related to being a stand-alone company.
 
Our unaudited pro forma combined statements of income do not give effect to initial expenses directly attributable to the spin-off because of their non-recurring nature. A significant portion of these non-recurring charges to effect the separation will be incurred by First Data, such as investment banker fees, outside legal and accounting fees relating to the spin-off, office move costs, costs to separate information systems and temporary consulting costs. We will incur separation costs that have a future benefit to our company such as recruiting and relocation expenses associated with hiring key senior management positions new to our company, other employee compensation expenses and temporary labor used to develop ongoing processes. We estimate total non-recurring separation charges that our company will incur, which are not included in our unaudited pro forma combined statements of income, to be approximately $20 million to $25 million. We anticipate that substantially all of these costs will be incurred within 12 months of the spin-off. See “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement—Expenses.”
 
The pro forma adjustments are based upon available information and assumptions that management believes are reasonable based on our current plans and expectations; however, such adjustments are subject to change based on the finalization of the terms of the spin-off and the transaction agreements. Additionally, this information is forward looking information and is subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See “Forward-Looking Statements” and “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement” on pages [    ] and [    ], respectively, for further information.
 
The unaudited pro forma combined statements of income data for the six months ended June 30, 2006 and the year ended December 31, 2005 have been prepared as though the spin-off had occurred as of January 1, 2005. The unaudited pro forma combined balance sheet data as of June 30, 2006 have been prepared as though the spin-off had occurred on June 30, 2006.
 
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Historical Data

 	 	Six Months Ended
June 30,	 	 	Years Ended December 31,	 	
(in millions)	 	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	 	2002	 	 	2001	 	
 	 	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	 	(unaudited)	 	 	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
Statements of Income Data:	 				 				 				 				 				 				 				
Revenues (a)	 	$	2,156.6	 	 	$	1,900.4	 	 	$	3,987.9	 	 	$	3,547.6	 	 	$	3,151.6	 	 	$	2,743.4	 	 	$	2,314.4	 	
Operating expenses (a) (b) (c) (d)	 	 	1,517.5	 	 	 	1,287.8	 	 	 	2,718.7	 	 	 	2,435.5	 	 	 	2,148.6	 	 	 	1,919.9	 	 	 	1,651.0	 	
Operating income	 	 	639.1	 	 	 	612.6	 	 	 	1,269.2	 	 	 	1,112.1	 	 	 	1,003.0	 	 	 	823.5	 	 	 	663.4	 	
Other income/(expense), net (e)	 	 	9.6	 	 	 	42.0	 	 	 	74.9	 	 	 	(13.5	)	 	 	(40.4	)	 	 	(24.2	)	 	 	(1.1	)	
Net income (b) (c) (d)	 	 	438.7	 	 	 	451.6	 	 	 	927.4	 	 	 	751.6	 	 	 	633.7	 	 	 	494.1	 	 	 	407.9	 	
								
Cash Flow Data:	 				 				 				 				 				 				 				
Net cash provided by operating activities	 	 	481.9	 	 	 	467.9	 	 	 	1,002.8	 	 	 	930.2	 	 	 	792.8	 	 	 	607.5	 	 	 	526.1	 	
Dividends to parent company	 	 	—  	 	 	 	—  	 	 	 	417.2	 	 	 	659.8	 	 	 	324.2	 	 	 	486.8	 	 	 	1,047.3	 	
								
Key Indicators (unaudited):	 				 				 				 				 				 				 				
Consumer-to-consumer transactions (f)	 	 	69.89	 	 	 	54.09	 	 	 	118.52	 	 	 	96.66	 	 	 	81.04	 	 	 	67.84	 	 	 	55.78	 	
Consumer-to-business transactions (g)	 	 	120.71	 	 	 	102.30	 	 	 	215.11	 	 	 	192.57	 	 	 	179.39	 	 	 	145.01	 	 	 	113.79	 	
								
Growth Rates (unaudited):	 				 				 				 				 				 				 				
Revenue	 	 	13	%	 	 	12	%	 	 	12	%	 	 	13	%	 	 	15	%	 	 	19	%	 				
Operating income	 	 	4	%	 	 	16	%	 	 	14	%	 	 	11	%	 	 	22	%	 	 	24	%	 				
Net income	 	 	(3	)%	 	 	24	%	 	 	23	%	 	 	19	%	 	 	28	%	 	 	21	%	 				
Consumer-to-consumer transactions	 	 	29	%	 	 	19	%	 	 	23	%	 	 	19	%	 	 	19	%	 	 	22	%	 				
Consumer-to-business transactions	 	 	18	%	 	 	7	%	 	 	12	%	 	 	7	%	 	 	24	%	 	 	27	%	 				
			
 	 	As of June 30,	 	 	As of December 31,	 	
 	 	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	 	2002	 	 	2001	 	
 	 	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	 	(unaudited)	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
Balance Sheet Data:	 				 				 				 				 				 				 				
Total assets	 	$	4,995.6	 	 	$	3,770.5	 	 	$	4,606.4	 	 	$	3,330.2	 	 	$	3,029.9	 	 	$	2,472.4	 	 	$	2,189.8	 	
Total liabilities	 	 	1,742.1	 	 	 	1,390.3	 	 	 	1,794.6	 	 	 	1,395.7	 	 	 	1,201.0	 	 	 	1,001.7	 	 	 	846.4	 	
Net investment in The Western Union Company	 	 	3,253.5	 	 	 	2,380.2	 	 	 	2,811.8	 	 	 	1,934.5	 	 	 	1,828.9	 	 	 	1,470.7	 	 	 	1,343.4	 	
 
Unaudited Pro Forma Combined Financial Data

 	  	Six Months Ended
June 30,	  	Year Ended
December 31,	
(in millions, except per share amounts)	  	2006	  	2005	
 	  	 	  	(restated)	
Statements of Income Data:	  			  			
Revenues	  	$	2,156.6	  	$	3,987.9	
Operating expenses (d)	  	 	1,547.5	  	 	2,778.7	
Net income	  	 	335.9	  	 	738.9	
Pro forma earnings per share:	  			  			
Basic (h)	  	$	0.44	  	$	0.97	
Diluted (h)	  	$	0.43	  	$	0.95	
Pro forma shares outstanding:	  			  			
Basic (h)	  	 	765.2	  	 	765.2	
Diluted (h)	  	 	776.9	  	 	776.9	
 
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 	  	As of June 30, 2006	 	 	 	
Balance Sheet Data:	  				 		
Total assets	  	$	4,869.5	 	 		
Debt	  	 	3,600.0	 	 		
Total liabilities	  	 	5,445.7	 	 		
Stockholders’ deficiency	  	 	(576.2	)	 		

(a)	In January 2002, our company adopted Emerging Issues Task Force 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred,” or “EITF 01-14,” which requires that reimbursements received for “out-of-pocket” expenses be characterized as revenue. The year ended December 31, 2001 has been adjusted for this adoption. Operating expenses include cost of services and selling, general and administrative expenses.	
(b)	In January 2002, our company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” or “SFAS 142,” which requires that goodwill no longer be amortized effective January 1, 2002. Prior to our adoption of SFAS 142, goodwill was amortized on a straight-line basis over estimated useful lives ranging from 10 to 40 years.	
(c)	In 2002, our company recorded expenses of $41.0 million related to the settlement of certain class action litigation and regulatory matters.	
(d)	We adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” or “SFAS 123R,” following the modified prospective method effective January 1, 2006. SFAS 123R requires all stock-based payments to employees to be recognized in the income statement based on their respective grant date fair values over the corresponding service periods and also requires an estimation of forfeitures when calculating compensation expense. Stock-based compensation expense, including the impact of adopting SFAS 123R, was $6.1 million for the six months ended June 30, 2006.	
(e)	Primarily includes derivative gains and losses, the net foreign exchange effect on notes receivable from affiliates and related foreign currency swaps with First Data, and net interest income due from affiliates. We anticipate volatility with respect to derivative gains and losses until we have redesignated our foreign currency forward contracts by modifying all hedge documentation to allow for cash flow hedge accounting with respect to these and future foreign currency forward positions. We also anticipate volatility with respect to the revaluation of our euro denominated notes receivable from affiliates and related foreign currency swap agreements with First Data until we have settled our notes receivable from affiliates and related foreign currency swap agreements as part of the spin-off. During the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005, 2004 and 2003, the pre-tax derivative gain (loss) was $(27.2) million, $36.8 million, $45.8 million, $(30.2) million, and $(37.9) million, respectively. During the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005 and 2004, the pre-tax gain (loss) on foreign exchange translation of notes receivable from affiliates and valuation of related foreign currency swap agreements was $(4.1) million, $(9.8) million, $(5.9) million, and $7.5 million, respectively. There was no gain or loss during 2003.	
(f)	Consumer-to-consumer transactions include consumer-to-consumer money transfer services worldwide. Amounts include Vigo Remittance Corp. transactions since the acquisition date of October 21, 2005.	
(g)	Consumer-to-business transactions include Quick Collect, Convenience Pay, Speedpay and Equity Accelerator transactions processed by us. Amounts include E Commerce Group, Inc. (Speedpay) transactions since its acquisition in June 2002 and Paymap Inc. (Equity Accelerator and Just-in-Time) transactions since its acquisition in April 2002.	
(h)	The calculation of pro forma basic earnings per share and shares outstanding is based on the number of shares of First Data common stock outstanding as of June 30, 2006 adjusted for an assumed distribution ratio of one share of our common stock for every share of First Data common stock. The calculation of pro forma diluted earnings per share and shares outstanding for the periods presented is based on the number of shares of First Data common stock outstanding as of June 30, 2006 and diluted shares of common stock outstanding as of June 30, 2006 adjusted for the same assumed distribution ratio. This calculation may not be indicative of the dilutive effect that will actually result from the replacement of First Data stock-based awards held by our employees and employees of First Data or the grant of new stock-based awards. The number of dilutive shares of our common stock that will result from First Data stock options, restricted stock awards and restricted stock units held by our employees will not be determined until immediately after the spin-off. However, we currently expect the number of dilutive shares resulting from the replacement of our employees’ First Data stock options, restricted stock awards and restricted stock units could be greater than one dilutive share of our common stock after the spin-off for each dilutive share of First Data common stock held prior to the spin-off. See “Our Relationship with First Data After the Spin-Off—Employee Matters Agreement” on page [    ] for further information.	
 
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 RISK FACTORS
 
You should carefully consider each of the following risks and all of the other information contained in this information statement. Some of these risks relate principally to our business and the industry in which we operate, while others relate principally to our spin-off from First Data, and other risks relate to the securities markets generally and ownership of our common stock.
 
Our business, financial position, results of operations or liquidity could be adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.
 
Risks Relating to the Spin-Off
 
We may not realize the potential benefits from the spin-off.
 
We may not realize the potential benefits that we expect from our spin-off from First Data. We have described those anticipated benefits elsewhere in this information statement. See “The Spin-Off—Background and Reasons for the Spin-Off.” In addition, we will incur significant costs, including those described below, which may exceed our estimates, and we will incur some negative effects from our separation from First Data, including loss of access to the financial, managerial and professional resources from which we have benefited in the past.
 
Our historical combined and pro forma financial information are not necessarily indicative of our future financial position, future results of operations or future cash flows nor do they reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented.
 
Our historical combined financial information included in this information statement does not reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented and is not necessarily indicative of our future financial position, future results of operations or future cash flows. This is primarily a result of the following factors:
 
 	•	 	Our historical combined financial results reflect allocation of expenses from First Data. Those allocations may be lower than the comparable expenses we would have incurred as a stand-alone company.	
 
 	•	 	Our working capital requirements historically have been satisfied as part of First Data’s corporate-wide cash management policies. Our cost of debt and our capitalization will be significantly different from that reflected in our historical combined financial statements.	
 
 	•	 	Significant changes will occur in our cost structure, financing and business operations as a result of our spin-off from First Data, including the costs for us to establish our operating infrastructure and costs related to being a stand-alone company.	
 
The pro forma adjustments are based upon available information and assumptions that we believe are reasonable; however, our assumptions may not prove to be accurate. In addition, our unaudited pro forma combined financial statements do not give effect to all on-going additional costs that we expect to incur in connection with being a stand-alone company. Nor do the unaudited pro forma combined statements of income give effect to certain initial separation costs. Accordingly, our unaudited pro forma combined financial statements do not reflect what our financial position or results of operations would have been as a stand-alone company and are not necessarily indicative of our future financial position or future results of operations. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Combined Financial Statements” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement.
 
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We will incur significant expenses to create the infrastructure necessary to operate as a stand-alone company, and we will experience increased on-going costs in connection with being a stand-alone company.
 
We have historically used First Data’s infrastructure to support our business functions, including the telecommunications system supporting our operations and the systems that provide for accounting and financial reporting, accounts payable and receivable processing, procurement and human resource management. The expenses related to establishing and maintaining this infrastructure were spread among all of the First Data businesses. Following the spin-off, we will no longer have access to First Data’s infrastructure, and we will need to establish our own. We expect to incur costs in 2006 to establish the necessary infrastructure. See “Unaudited Pro Forma Combined Financial Statements.”
 
First Data also performs many important corporate functions for us, including treasury, tax administration, accounting, financial reporting, human resources, employee benefits and incentives, legal, procurement and other services. We currently pay First Data for these services on a cost-allocation basis. Following the spin-off, First Data will continue to provide some of these services to us on a transitional basis for a period of up to one year, pursuant to a transition services agreement we will enter into with First Data. For more information regarding the transition services agreement, see “Our Relationship with First Data After the Spin-Off—Transition Services Agreement.” At the end of this transition period, we will need to perform these functions ourselves or hire third parties to perform these functions on our behalf. The costs associated with performing or outsourcing these functions may exceed those charged by First Data when we were part of First Data or during the transition period. A significant increase in the costs of performing or outsourcing these functions could adversely affect our business, financial position and results of operations.
 
Prior to the spin-off, our business benefited from First Data’s purchasing power when procuring goods and services, including telecommunications service, computer hardware and software licenses, office supplies and equipment and travel services. As a stand-alone company, we may be unable to obtain goods and services at comparable prices or on terms as favorable as those obtained prior to the spin-off, which could decrease our overall profitability.
 
If the spin-off does not qualify as a tax-free transaction, you and First Data could be subject to material amounts of taxes and, in certain circumstances, our company could be required to indemnify First Data for material taxes pursuant to indemnification obligations under the tax allocation agreement.
 
The spin-off is conditioned upon First Data’s receipt of a private letter ruling from the Internal Revenue Service, in form and substance satisfactory to First Data, to the effect that, among other things, the spin-off (including certain related transactions) will qualify as tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code. Although a private letter ruling from the Internal Revenue Service generally is binding on the Internal Revenue Service, if the factual assumptions or representations made in the private letter ruling request are untrue or incomplete in any material respect, then First Data will not be able to rely on the ruling. Furthermore, the Internal Revenue Service will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under section 355 of the Internal Revenue Code. Rather, the private letter ruling will be based upon representations by First Data that those requirements have been satisfied, and any inaccuracy in such representations could invalidate the ruling.
 
The spin-off is also conditioned upon First Data’s receipt of an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in form and substance satisfactory to First Data, to the effect that the spin-off (including certain related transactions) will be tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code. The opinion will rely on the Internal Revenue Service private letter ruling as to matters covered by the ruling. The opinion will be based on, among other things, certain assumptions and representations as to factual matters made by First Data and us which, if untrue or incomplete in any material respect, would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the Internal Revenue Service or the courts, and the Internal Revenue Service or the courts may not agree with the opinion.
 
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Neither First Data nor Western Union is aware of any facts or circumstances that would cause the assumptions or representations to be relied upon in the private letter ruling or opinion of counsel to be untrue or incomplete in any material respect. If, notwithstanding receipt of the private letter ruling and opinion of counsel, the spin-off were determined to be a taxable transaction, each holder of First Data common stock who receives shares of our common stock in connection with the spin-off would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of our common stock received. First Data would recognize taxable gain equal to the excess of the fair market value of the consideration received by First Data in the contribution over First Data’s tax basis in the assets contributed to us in the contribution. See “The Spin-Off—Important Federal Income Tax Consequences” beginning on page [•].
 
With respect to taxes and other liabilities that could be imposed in connection with the spin-off (and certain related transactions), under the terms of the tax allocation agreement we will enter into with First Data prior to the spin-off, we will be liable to First Data for any such taxes or liabilities resulting from actions taken by or with respect to us, one of our affiliates, or any person that, after the spin-off, is an affiliate thereof. See “Our Relationship with First Data After the Spin-Off—Tax Allocation Agreement” beginning on page [•]. If we are required to indemnify First Data for taxes incurred as a result of the spin-off being taxable to First Data, it would have a material adverse effect on our business, financial position and results of operations.
 
Our separation from First Data could have negative consequences on our effective tax rate.
 
Following the spin-off, we will not be able to file a consolidated United States federal income tax return with First Data. As a consequence, following the spin-off, net operating and capital losses, credits and other tax attributes generated by the First Data group will not be available to offset income earned or taxes owed by our consolidated group for United States federal income tax purposes. Any benefits relating to taxes arising from being part of the larger First Data group also may not be available. As a result of these and other inefficiencies, the aggregate amount of United States federal income tax that we pay may increase after the spin-off, and, in addition, we may not be able to realize fully certain of our deferred tax assets.
 
We have accumulated approximately $552.5 million of foreign earnings at December 31, 2005, which were reinvested indefinitely outside the United States primarily through certain First Data international acquisitions. As a result, no provision has been made for United States federal income taxes on those foreign earnings. As a result of the spin-off, the opportunity to use those foreign earnings to fund First Data international acquisitions will no longer exist. In addition, it is likely that First Data will repay those foreign earnings to us for reinvestment in our foreign businesses. At this time, we intend to reinvest those funds in foreign business as investment needs and opportunities arise. If such foreign investment needs and opportunities are not sufficient at some point in the future, we could be required to report incremental United States federal income tax on the excess foreign earnings whether or not actually repatriated. Under such circumstances, our effective tax rate would increase.
 
Under some circumstances, we could be prevented from engaging in strategic or capital raising transactions, and we could be liable to First Data for any resulting adverse tax consequences.
 
Even if the spin-off otherwise qualifies as a tax-free distribution under section 355 of the Internal Revenue Code, the spin-off may result in significant United States federal income tax liabilities to First Data if 50% or more of First Data’s stock or our stock (in each case, by vote or value) is treated as having been acquired, directly or indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the spin-off. For purposes of this test, any acquisitions of First Data stock or our stock, or any understanding, arrangement or substantial negotiations regarding an acquisition of First Data stock or our stock, within two years before or after the spin-off are subject to special scrutiny.
 
The process for determining whether a change in control prohibited under the foregoing rules has occurred is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. If a
 
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direct or indirect acquisition of First Data stock or our stock resulted in a change in control prohibited under those rules, First Data (but not its stockholders) would recognize taxable gain. Under the tax allocation agreement, each party will be required to indemnify the other against any such tax liabilities solely resulting from actions taken by or in respect of the indemnifying party (including certain of its affiliates). See “Our Relationship with First Data After the Spin-Off—Tax Allocation Agreement” beginning on page [•]. As a result, we may be unable to engage in strategic or capital raising transactions that our stockholders might consider favorable, or to structure potential transactions in the manner most favorable to us.
 
Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the spin-off. If we are unable to achieve and maintain effective internal controls, our business, financial position and results of operations could be adversely affected.
 
Our financial results previously were included within the consolidated results of First Data, and our reporting and control systems were appropriate for those of subsidiaries of a public company. However, we were not directly subject to reporting and other requirements of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. As a result of the spin-off, we will be directly subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which will require annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. Furthermore, we will need to compile and submit data for financial service regulators (such as various state banking regulators and European central banks). These reporting and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources. To comply with these requirements, we anticipate that we will need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. If we are unable to upgrade our financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired. Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial position and results of operations.
 
Following the spin-off, we will have substantial debt obligations that could restrict our operations. In addition, our business, financial position and results of operations could be harmed by adverse rating actions by credit rating agencies.
 
Historically, Western Union has relied on First Data for its capital needs. Following the spin-off, we will have direct access to the capital markets and will need to finance our company’s capital needs. In connection with the spin-off we will incur substantial indebtedness. Giving effect to the debt we will incur in connection with the spin-off, we expect that our total combined indebtedness for borrowed money will be approximately $3.6 billion. We may also incur additional substantial indebtedness in the future.
 
Our indebtedness could have adverse consequences, including:
 
 	•	 	limiting our ability to pay dividends to our stockholders;	
 
 	•	 	increasing our vulnerability to changing economic, regulatory and industry conditions;	
 
 	•	 	limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry;	
 
 	•	 	limiting our ability to borrow additional funds; and	
 
 	•	 	requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions and other purposes.	
 
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There would be adverse tax consequences associated with using earnings generated outside the United States to pay the interest and principal on our indebtedness. Accordingly, this portion of our cash flow will be unavailable under normal circumstances to service our debt obligations.
 
It is important to our business to receive and maintain an investment grade long-term credit rating. We have had conversations with each of the major credit ratings agencies about our credit profile. At this time we are targeting to have, following the spin-off, debt with an investment grade rating. If our debt does not receive this rating, if our initial rating is downgraded, or if ratings agencies indicate that a downgrade may occur, our business, financial position and results of operations could be adversely affected and perceptions of our financial strength could be damaged. This could adversely affect our relationships with our agents, particularly those agents that are financial institutions or post offices. In addition, a downgrade or an indication that a downgrade may occur also could result in regulators imposing additional capital and other requirements on us, including imposing restrictions on the ability of our regulated subsidiaries to pay dividends. Also, a downgrade could increase our costs of borrowing money, adversely affecting our business, financial position and results of operations.
 
After the spin-off, our balance sheet as a stand-alone company may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, financial position and results of operations.
 
In connection with the spin-off we will incur substantial indebtedness. As a result, our pro forma stockholders’ deficiency as of June 30, 2006 was $576.2 million. Our regulators likely will expect us, as a stand-alone company, to possess sufficient financial soundness and strength to adequately support our regulated subsidiaries. In addition, although we will not be a bank holding company for purposes of United States law or the law of any other jurisdiction, as a global provider of payments services and in light of the changing regulatory environment in various jurisdictions, we could be subject to new capital requirements introduced or imposed by our regulators that could require us to issue securities that would qualify as Tier 1 regulatory capital under the Basel Committee accords or retain earnings over a period of time. Any of these requirements could adversely affect our business, financial position and results of operations.
 
We may have received better terms from unaffiliated third parties than the terms we receive in our agreements with First Data.
 
The agreements we will enter into with First Data in connection with the spin-off, including the separation and distribution agreement, tax allocation agreement, employee matters agreement, retail money order issuance and management services agreement and transition services agreement, were negotiated in the context of the spin-off while we were still part of First Data and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. The terms of the agreements we negotiated in the context of the spin-off related to, among other things, the allocation of assets, liabilities, rights and other obligations between First Data and us. We may have received better terms from third parties because third parties may have competed with each other to win our business. See “Our Relationship with First Data After the Spin-Off.”
 
Regulators may impose conditions in connection with approving the spin-off which may have an adverse effect on our business, financial position and results of operations.
 
The transfer of some of the money transfer and consumer payment businesses to us will require filings to be made with some regulators in and outside of the United States. In some jurisdictions, the regulators will need to approve aspects of the transfer that occur within, or otherwise affect, their jurisdictions before the transfers or spin-off can take place. In other jurisdictions, regulators will need to be notified after the spin-off. It is possible that one or more approvals may not be given, or may be delayed, or a jurisdiction notified after the fact could raise objections or concerns which could affect our ability to operate in the affected jurisdiction. Regulatory
 
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conditions placed on the transfers or the spin-off may have an adverse effect on our business, financial position and results of operations.
 
Risks Relating to Our Business and Industry
 
If we are unable to maintain our agent network, our business, financial position and results of operations would be adversely affected.
 
Most of our revenue is derived through our agent network. Transaction volumes at existing agent locations often increase over time and new agents provide us with additional revenue. If agents decide to leave our network, or if we are unable to sign new agents, our revenue and profit growth rates may be adversely affected. Agent attrition might occur for a number of reasons, including a competitor engaging an agent or an agent’s dissatisfaction with its relationship with us or the revenue derived from that relationship. In addition, agents may generate fewer transactions or less revenue for various reasons, including the appearance of competitors close to our agent locations or increased competition. Because an agent is a third party that engages in a variety of activities in addition to providing our services, it may encounter business difficulties unrelated to its provision of our services, which could cause the agent to reduce its number of locations, hours of operation, or cease doing business altogether.
 
Our business is subject to a wide variety of laws and regulations, especially laws designed to prevent money laundering and terrorist financing. Failure by us or our agents to comply with those laws and regulations could have an adverse effect on our business, financial position and results of operations.
 
As described under “Our Business—Regulation,” our business is subject to a wide range of laws and regulations. These include financial services regulations, consumer disclosure and consumer protection laws, currency control regulations, money transfer and payment instrument licensing regulations, escheat laws and laws covering consumer privacy, data protection and information security. Our services also are subject to an increasingly strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing and other illicit activity. For example, certain economic and trade sanctions programs that are administered by the Treasury Department’s Office of Foreign Assets Control prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. As federal and state legislative and regulatory scrutiny and action in these areas increase, we expect that our costs of complying with these requirements will increase, perhaps substantially. Failure to comply with any of these requirements—by either us or our agents (which are third parties, over which we have limited legal and practical control)—could result in the suspension or revocation of a license or registration required to provide money transfer services, the limitation, suspension or termination of services and/or the imposition of civil and criminal penalties, including fines. In addition to those direct costs, a failure by us or our agents to comply with applicable laws and regulations also could seriously damage our reputation and brands, and result in diminished revenue and profit and increased operating costs.
 
In connection with governmental efforts to prevent money laundering and terrorist financing and pursuant to legal obligations and authorizations, Western Union makes information available to United States federal and state, as well as certain foreign, law enforcement agencies. In recent years, government agencies have increased their requests for such information from Western Union and other companies (both financial service providers and others), particularly in connection with efforts to prevent terrorist financing. During the same period, there has also been increased public attention to concerns about consumer privacy, accompanied by legislation and regulations intended to address issues of data protection, information security and privacy. These two policy goals—the prevention of money laundering and terrorist financing and the protection of consumer privacy—may conflict, and the law in these areas is not consistent or settled. While we believe that Western Union is compliant with its legal responsibilities, the legal, political and business environments in this area are rapidly evolving, and subsequent legislation, regulation, litigation, court rulings or other events could expose Western Union to liability and reputational damage.
 
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As noted above, most of our revenue is derived through our agent network. The types of enterprises that are legally authorized to act as our agents vary significantly from one country to another. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute our services and the cost of providing such services, both by us and our agents. For example, a requirement that a money transfer provider be a bank or other highly regulated financial entity could increase significantly the cost of providing our services in many countries where that requirement does not exist today or could prevent us from offering our services in an affected country. Further, any changes in law that would require us to provide directly the money transfer services to consumers as opposed to through an agent network—effectively changing our business model—could significantly adversely impact our ability to provide our services, and/or the cost of our services, in the relevant jurisdiction.
 
Our fees may be reduced because of regulatory initiatives or proceedings that are either industry wide or specifically targeted at our company. For example, recent initiatives both in the United States and at G-8 summit meetings have focused on lowering international remittance costs. These initiatives may have an adverse impact on our business, financial position and results of operations.
 
Our agents are subject to a variety of regulatory requirements, which differ from jurisdiction to jurisdiction and are subject to change. A material change in the regulatory requirements necessary to offer money transfer services in a jurisdiction important to our business could mean increased costs and/or operational demands on our agents, which could result in the attrition of agents, a decrease in the number of locations at which money transfer services are offered and other negative consequences. The regulatory status of our agents could affect their ability to offer our services. For example, our agents in the United States are considered Money Service Businesses, or “MSBs,” under the Bank Secrecy Act. An increasing number of financial institutions view MSBs, as a class, as higher risk customers for purposes of their anti-money laundering programs. As a result, several financial institutions have terminated their banking relationships with some of our agents and with us. If a significant number of agents are unable to maintain existing or establish new banking relationships, they may not be able to continue to offer our services.
 
Virtually all of the Western Union branded agents offer our services on an exclusive basis—that is, they have agreed by contract not to provide any non-Western Union branded money transfer services. While we believe that these agreements generally are valid and enforceable, changes in laws regulating competition or in the interpretation of those laws could undermine our ability to enforce them in the future. For example, Russia and Ukraine have each enacted laws that effectively prohibit payment service providers, such as money transfer companies, from agreeing to exclusive arrangements with banks in those countries. The inability to enforce our exclusivity rights under our contracts could adversely affect our operations and revenue by, for example, allowing competitors to benefit from the goodwill associated with the Western Union brand at our agent locations.
 
We face competition from global and niche or corridor money transfer providers, United States and international banks, card associations, card-based payments providers and a number of other types of service providers. Our continued growth depends on our ability to compete effectively in the industry.
 
Money transfer and consumer payments are highly competitive industries comprised of players from a variety of financial and non-financial business groups. Our competitors include banks, credit unions, automated teller machine or “ATM” providers and operators, card associations, card-based payments providers such as issuers of e-money, travel cards or stored-value cards, informal remittance systems, web-based services, telephone payment systems (including mobile phone networks), postal organizations, retailers, check cashers, mail and courier services, currency exchanges and traditional money transfer companies. These services are differentiated by features and functionalities such as speed, convenience, network size, hours of operations, loyalty programs, reliability and price. Our continued growth depends on our ability to compete effectively in these industries. We have made periodic pricing decreases in response to competition and to implement our
 
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brand investment strategy, which includes better meeting consumer needs, maximizing market opportunities and strengthening our overall competitive positioning. Net consumer-to-consumer price decreases have been approximately 3% of our annual combined revenues in each of the last two years. In addition, failure to compete on service differentiation could significantly affect our future growth potential and related profitability.
 
Recently, card associations have become more active in promoting stored-value cards and other services that compete with our money transfer and consumer payments businesses. These associations, as well as debit networks, can be effective competitors because of the ubiquity of their brands, their large number of financial institution issuers and their extensive merchant networks. In addition, we offer consumers the option of using credit or debit cards in connection with certain of our services. The card associations and debit networks set the charge, known as an interchange fee, that we as a merchant must pay for accepting their cards. Their association and network rules also categorize transactions or cause us to categorize transactions in a manner that can affect the cost of the transaction to us or the consumer. Changes to interchange fees could increase our costs to accept cards in payment for services, while changes in how our services are categorized could make the use of cards to pay for our services less attractive to the consumer.
 
Many of our agents outside the United States are national post offices. These entities are usually governmental organizations that may enjoy special privileges or protections that could allow them to simultaneously develop their own money transfer businesses. International postal organizations could agree to establish a money transfer network among themselves. Due to the size of these organizations and the number of locations they have, any such network could represent significant competition to us. Because these entities are governmental organizations, they may be able to—or be required to—offer their money transfer services at, near or below their cost of providing such services.
 
Risks associated with operations outside the United States could adversely affect our business, financial position and results of operations.
 
Because an increasing portion of our revenue is generated in currencies other than the United States dollar, we are subject to risks related to changes in currency rates and foreign exchange regulation (such as the ability to repatriate funds to the United States, and the cost of repatriation). We intend to use foreign currency forward contracts to mitigate the risks associated with changes in foreign currency by properly designating future foreign currency forward contracts as hedges as well as redesignating certain existing contracts as hedges as expeditiously as possible. However, these derivative contracts do not eliminate all of the risks related to foreign currency translation.
 
Money transfers to, from or within or between countries may be limited or prohibited by law. At times in the past, we have been required to cease operations in particular countries due to political uncertainties or government restrictions imposed by foreign governments or the United States. Additionally, economic or political instability or natural disasters may make money transfers to, from or within a particular country difficult, such as when banks are closed, when currency devaluation makes exchange rates difficult to manage or when natural disasters or civil unrest makes access to agent locations unsafe. These risks could negatively impact our ability to make payments to or receive payments from international agents or our ability to recoup funds that have been advanced to international agents and could adversely affect our business, financial position and results of operations. In addition, the general state of telecommunications and infrastructure in some lesser developed countries creates operational risks for us and our agents that generally are not present in our operations in the United States and other more developed countries.
 
As noted above, many of our agents outside the United States are post offices, which are usually owned and operated by national governments. These governments may decide to change the terms under which they allow post offices to offer remittances and other financial services. For example, governments may decide to separate financial service operations from postal operations, or mandate the creation or privatization of a “post bank.” These changes could have an adverse effect on our ability to distribute and offer our services in countries that are material to our business.
 
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Interruptions in international migration patterns could adversely affect our business, financial position and results of operations.
 
The money transfer business relies in part on migration patterns, which bring workers into countries with greater economic opportunities than their native countries. A significant portion of money transfers is initiated by immigrants. Changes in immigration laws, such as those currently being considered by the United States Congress, economic development patterns that discourage international migration and political or other events (such as war, terrorism or health emergencies) that would make it more difficult for workers to migrate or work abroad could adversely affect our remittance volume or growth rate and could each have an adverse effect on our business, financial position and results of operations. For example, in the three months ended June 30, 2006, transaction growth in our consumer-to-consumer business, primarily the United States to Mexico and Latin American corridors, and to a lesser extent the domestic money transfer business, was adversely impacted by what we believe is uncertainty created by immigration reform activities in the United States.
 
Unfavorable resolution of tax contingencies could adversely affect our tax expense.
 
All of our operations have been included in the consolidated income tax returns of First Data. Our tax returns and positions are subject to review and audit by federal, state, local and international taxing authorities. An unfavorable outcome to a tax audit could result in higher tax costs, thereby negatively impacting our results of operations. In particular, we currently are in discussions with the Internal Revenue Service pursuant to the Internal Revenue Service’s Advance Pricing Agreement, or “APA,” Program. These discussions relate to certain tax aspects of a 2003 legal restructuring of our international operations. If an APA is negotiated successfully, during its term, generally we will avoid further examination by the Internal Revenue Service of the transfer pricing methods applicable to, and valuations of, the covered transactions. We continue to negotiate with the Internal Revenue Service in the APA process, and while we hope to reach a resolution through the process, there can be no assurances that the APA negotiations will be resolved in a manner acceptable to our company. If not so resolved, the matter would then likely proceed to other forums within the Internal Revenue Service. We have established contingency reserves for material, known tax exposures, including the potential for tax audit adjustments with respect to taxes associated with our foreign business that is the subject of the 2003 legal restructuring and the Internal Revenue Service’s APA Program discussions referenced above. These tax reserves reflect what we believe to be reasonable assumptions as to the likely resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. Regarding the 2003 legal restructuring, we have benefited by having our income from certain foreign-to-foreign money transfer transactions taxed at relatively low foreign tax rates rather than the United States statutory tax rate. The amount of taxes attributable to such rate differential is included in the “Foreign rate differential” line in the effective rate reconciliation in Note 9—“Income Taxes” to our historical combined financial statements and cumulatively totaled $131.6 million through December 31, 2005. Any differences from our positions as recorded in our financial statements upon resolution of these issues will be reflected as a part of the income tax expense in the period during which the issues are resolved. Such resolution could also affect our effective tax rate for future periods.
 
Acquisitions and integrating new businesses create risks and may affect operating results.
 
We occasionally acquire businesses both inside and outside the United States. The acquisition and integration of businesses involve a number of risks. The core risks involve valuation (negotiating a fair price for the business based on inherently limited due diligence) and integration (managing the complex process of integrating the acquired company’s people, products and services, technology and other assets in an effort to realize the projected value of the acquired company and the projected synergies of the acquisition). In addition, international acquisitions often involve additional or increased risks including, for example:
 
 	•	 	managing geographically separated organizations, systems and facilities;	
 
 	•	 	integrating personnel with diverse business backgrounds and organizational cultures;	
 
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 	•	 	integrating systems that may not have been designed or maintained to the same standards as those in the United States;	
 
 	•	 	complying with foreign regulatory requirements;	
 
 	•	 	fluctuations in currency exchange rates;	
 
 	•	 	enforcement of intellectual property rights in some foreign countries;	
 
 	•	 	difficulty entering new markets due to, among other things, customer acceptance and business knowledge of these new markets; and	
 
 	•	 	general economic and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular.	
 
Integrating operations could cause an interruption of, or divert resources from, one or more of our businesses and could result in the loss of key personnel. The diversion of management’s attention and any delays or difficulties encountered in connection with an acquisition and the integration of the acquired company’s operations could have an adverse effect on our business, financial position and results of operations.
 
Our ability to adopt technology in response to changing industry and consumer needs or trends poses a challenge to our business.
 
Our ability to compete in the markets we serve may be threatened by change, including changes in technology, changes with respect to consumer needs, competition and industry standards. We actively seek solutions that respond in a timely manner to new technology-based money transfer services such as Internet, land and mobile phone based money transfer services and prepaid, stored-value and other card-based money transfer services. Failure to respond well to these challenges could adversely impact our business, financial position and results of operations.
 
Western Union has been the subject of class-action litigation, and remains the subject of other litigation as well as consent agreements with or enforcement actions by regulators.
 
Western Union has been the subject of class-action litigation in the United States, alleging that its foreign exchange rate disclosures failed to adequately inform consumers about the revenue that Western Union and its agents derive from international remittances. These suits all have been settled without an admission of liability, and we have made certain changes in our advertising and consumer forms. It is possible that because of changes in law or future litigation or regulatory action, we could be required to modify our disclosures or our practices further. These modifications could be costly to implement, restrict our ability to advertise or promote our services and/or limit the amount of our foreign exchange income.
 
In addition, as a company that provides global financial services primarily to consumers, we could be subject to future class-action or other litigation alleging violations of consumer protection or other laws. We also are subject to claims asserted by consumers based on individual transactions.
 
We are subject to unclaimed or abandoned property (escheat) laws in the United States and abroad which require us to turn over to certain government authorities the property of others held by us that has been unclaimed for a specified period of time, such as unredeemed money transfers. We hold property subject to escheat laws and we have an ongoing program to comply with those laws. In addition, we are subject to audit with regard to our escheatment practices. Any difference between the amounts we have accrued for unclaimed property and amounts that are claimed by a state or foreign jurisdiction could have a significant impact on our results of operations and cash flows. See “Our Business—Regulation—Escheat Regulations.”
 
Our consumer payments business is subject to various United States federal, state and local laws and regulations, as well as laws and regulations outside the United States. Our United States business is subject to reporting, recordkeeping and anti-money laundering provisions of the Bank Secrecy Act, as amended by the USA
 
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PATRIOT Act of 2001, and to regulatory oversight and enforcement by the United States Department of Treasury’s Financial Crimes Enforcement Network, or “FinCEN.” In addition, as a money transmitter, we are subject to licensing, regulation and examination by almost all the states and the District of Columbia.
 
Over the past several years, we have entered into a number of consent agreements with federal and state authorities, including FinCEN, the New York State Banking Department, the California Department of Financial Institutions and the Arizona Department of Financial Institutions, relating to the Bank Secrecy Act and anti-money laundering requirements and related consumer identification matters. These agreements required us to pay civil penalties and to take certain measures to enhance our compliance with recordkeeping, reporting, training and agent oversight requirements under applicable state and federal law. The financial services industry and businesses like ours continue to be under significant federal and state regulatory scrutiny with respect to the Bank Secrecy Act and anti-money laundering compliance matters. It is possible that as a result of periodic examinations or otherwise, we could be subject to deficiency findings, fines, criminal penalties, enforcement actions or similar consent agreements in the future that could adversely affect our business, financial position and results of operations.
 
Our ability to remain competitive depends in part on our ability to protect our brands and our other intellectual property rights and to defend ourselves against potential patent infringement claims.
 
The Western Union ® brand, consisting of trademark registrations in various countries, is material to our company. The loss of the Western Union trademark or a diminution in the perceived quality associated with the name would harm our business. Similar to the Western Union trademark, the Vigo SM service mark and the Orlandi Valuta ® , Speedpay ® , Western Union Quick Collect ® and Paymap ® trademarks are important to our company and a loss of the service mark or trademarks or a diminution in the perceived quality associated with these names could harm our business.
 
The laws of certain foreign countries in which we do business either do not recognize intellectual property rights or do not protect them to the same extent as do the laws of the United States. Adverse determinations in judicial or administrative proceedings in the United States or in foreign countries could impair our ability to sell our services or license or protect our intellectual property, which could adversely affect our business, financial position and results of operations.
 
We have been, and in the future may be, subject to claims alleging that our technology or business methods infringe patents owned by others, both in and outside the United States. Unfavorable resolution of these claims could require us to change how we deliver a service, result in significant financial consequences, or both, which could adversely affect our business, financial position and results of operations.
 
Interruptions in our systems may have a significant effect on our business.
 
Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer information systems. Any significant interruptions could harm our business and reputation and result in a loss of consumers. Our systems and operations could be exposed to damage or interruption from fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, unauthorized entry and computer viruses or other causes, many of which may be beyond our control. Although we have taken steps to prevent a system failure, our measures may not be successful and we may experience problems other than system failures. We also may experience software defects, development delays, installation difficulties and other systems problems, which would harm our business and reputation and expose us to potential liability which may not be fully covered by our business interruption insurance. Our data applications may not be sufficient to address technological advances, changing market conditions or other developments.
 
Breaches of our information security policies or safeguards could adversely affect our ability to operate and could damage our reputation, business, financial position and results of operations.
 
We collect, transfer and retain consumer data as part of our business. These activities are subject to laws and regulations in the United States and other jurisdictions in which our services are available. These requirements,
 
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which often differ materially among the many jurisdictions, are designed to protect the privacy of consumers’ personal information and to prevent that information from being inappropriately disclosed. We have developed and maintain technical and operational safeguards designed to comply with applicable legal requirements. However, despite those safeguards, it is possible that hackers, employees acting contrary to our policies or others could improperly access our systems or improperly obtain or disclose data about our consumers. Any breach of our security policies or applicable legal requirements resulting in a compromise of consumer data could expose us to regulatory enforcement action, limit our ability to provide services, subject us to litigation and/or damage our reputation.
 
We face credit and fraud risks from our agents and from consumers that could adversely affect our business, financial position and results of operations.
 
The vast majority of our global funds transfer business is conducted through third-party agents that provide our services to consumers at their retail locations. These agents sell our services, collect funds from consumers and are required to pay the proceeds from these transactions to us. As a result, we have credit exposure to our agents. In some countries, our agent networks are comprised of agents that establish subagent relationships; these agents must collect funds from their subagents in order to pay us. We are not insured against credit losses, except in certain circumstances (generally only limited instances and only in the United States) related to agent theft or fraud. If an agent becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to pay money order or money transfer proceeds to us, we must nonetheless pay the money order or complete the money transfer on behalf of the consumer.
 
From time to time, we have made, and may in the future make, short term advances and longer term loans to our agents. These advances and loans generally are secured by settlement funds payable by us to these agents. However, the failure of these borrowing agents to repay these advances and loans constitutes a credit risk to us.
 
We offer consumers the ability to transfer money utilizing their credit or debit card, through various distribution channels such as the Internet or telephone. Because they are not face-to-face transactions, these transactions involve a greater risk of fraud. We apply verification and other tools to help authenticate transactions and protect against fraud. However, these tools may not be successful in protecting us against fraud. As the merchant of these transactions, we are not insured for losses and bear the financial risk of the full amount sent.
 
We have identified a material weakness in the design and operation of our internal control related to compliance with SFAS No. 133.
Based upon an evaluation of our initial documentation of hedging arrangements in accordance with Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities, (“SFAS No. 133”), we have concluded that certain of our foreign exchange forward contracts did not qualify for cash flow hedge accounting since the initial documentation with respect to these instruments did not meet the technical requirements of SFAS No. 133. Accordingly, we have restated our historical combined financial statements and, as expeditiously as possible, we intend to redesignate the affected derivative instruments as hedges with revised documentation and to account for them as hedging instruments in accordance with SFAS No. 133 so as to remove this source of potential volatility in reported financial results. We believed our initial accounting treatment for the derivative instruments properly reflected the intent and economics of the underlying transactions; however, the interpretations of how to apply SFAS No. 133 and how to adequately provide documentation for such instruments so as to qualify for hedge accounting are very complex. We have concluded that the way we have documented and accounted for those certain derivative instruments relating to our foreign exchange forward contracts is technically a material weakness in our internal controls. Although we believe that we have identified the problem and taken adequate steps to cause our accounting practices to comply with SFAS No. 133, there can be no assurance that these steps are sufficient to eliminate this material weakness or that additional significant deficiencies or material weaknesses in our internal controls will not be discovered in the future. Any failure to sufficiently address this material weakness, or the identification of additional significant deficiencies or material weaknesses, could have an adverse effect on our business, reputation, financial position and results of operation.
 
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Risks Relating to Our Common Stock
 
There has been no prior market for our common stock, the trading price of our common stock may be volatile and you may not be able to sell your shares at or above the initial market price for our common stock following the spin-off.
 
There has been no prior trading market for our common stock. On or about the record date, our common stock will begin to trade on a “when-issued” basis. We have not and will not set the initial price of our common stock; that price will instead be established by the public markets.
 
We cannot predict the price at which our common stock will trade after the spin-off. In fact, the combined trading prices of a share of our common stock and a share of First Data common stock after the spin-off may not equal or exceed the trading price of a share of First Data common stock immediately prior to the spin-off. The price at which our common stock trades likely will fluctuate significantly, particularly until an orderly market develops. Prices for our common stock will be determined in the public markets and may be influenced by many factors, many of which are beyond our control, including:
 
 	•	 	lack of a trading history;	
 
 	•	 	changes in expectations concerning our future financial performance and the future performance of the money transfer and consumer payments industries in general, including financial estimates and recommendations by securities analysts;	
 
 	•	 	our financial results and differences between our actual financial and operating results and those expected by investors and analysts;	
 
 	•	 	strategic moves by us or our competitors, such as acquisitions or restructurings;	
 
 	•	 	changes in the regulatory environment governing our business;	
 
 	•	 	our capital structure, including the amount of our indebtedness;	
 
 	•	 	general economic, industry and market conditions;	
 
 	•	 	the depth and liquidity of the market for our common stock;	
 
 	•	 	fluctuations in currency exchange rates;	
 
 	•	 	our dividend policy;	
 
 	•	 	investor perceptions of our business and us; and	
 
 	•	 	the impact of the factors referred to elsewhere in “Risk Factors.”	
 
For more information, see “The Spin-Off—Market for Our Common Stock; Trading of Our Common Stock Prior to the Spin-Off.”
 
Substantial sales of our common stock could occur in connection with the spin-off, which could cause our stock price to decline.
 
Shares of our common stock distributed in connection with the spin-off generally may be sold in the public markets immediately following the spin-off. Some First Data stockholders who receive shares of our common stock in connection with the spin-off may sell our shares shortly after the spin-off for any number of reasons. In particular, index funds tied to the Standard & Poor’s 500 Index and other indices hold shares of First Data common stock. To the extent our common stock is not included in these indices, certain of these index funds likely will be required to sell the shares of our common stock they receive in connection with the spin-off. The sale of significant amounts of our common stock, or the perception in the market that this will occur, may lower the market price of our common stock.
 
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Certain provisions of our certificate of incorporation and by-laws will make it difficult for stockholders to change the composition of our board of directors and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial.
 
Certain provisions of our certificate of incorporation and by-laws could have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of us and our stockholders. These provisions include, among other things, the following:
 
 	•	 	a classified board of directors with three-year staggered terms;	
 
 	•	 	the size of the board of directors may be set only by the board of directors;	
 
 	•	 	our board of directors will have the ability to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval;	
 
 	•	 	stockholder action may be taken only at a special or regular meeting;	
 
 	•	 	stockholders may not call a special meeting of stockholders;	
 
 	•	 	advance notice procedures for nominating candidates to our board of directors or presenting matters at stockholder meetings;	
 
 	•	 	directors may be removed only for cause; and	
 
 	•	 	vacancies on our board of directors may only be filled by our board of directors.	
 
While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our board of directors, they could enable our board of directors to hinder or frustrate a transaction that some, or a majority, of our stockholders might believe to be in their best interests and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. For more information, see “Description of Our Capital Stock” and “Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-Laws.”
 
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 FORWARD-LOOKING STATEMENTS
 
This information statement and other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) (as well as information included in our other written or oral statements) contain, or will contain, disclosures which are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts, and generally can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “could,” “would,” “likely,” “intend” or “continue.” These forward-looking statements address, among other things, the anticipated effects of the spin-off. These forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. These factors include, but are not limited to:
 
 	•	 	the impact of our spin-off from First Data;	
 
 	•	 	changes in immigration laws, patterns and other factors related to immigrants;	
 
 	•	 	the integration of significant businesses and technologies we acquire and realization of anticipated synergies from these acquisitions;	
 
 	•	 	technological changes, particularly with respect to e-commerce;	
 
 	•	 	our ability to attract and retain qualified key employees;	
 
 	•	 	changes in laws, regulations or industry standards affecting our businesses;	
 
 	•	 	changes in foreign exchange spreads on money transfer transactions;	
 
 	•	 	changes in the political or economic climate in countries in which we operate;	
 
 	•	 	unanticipated developments relating to lawsuits, investigations or similar matters;	
 
 	•	 	catastrophic events;	
 
 	•	 	any material breach of security of any of our systems; and	
 
 	•	 	the other factors described under “Risk Factors.”	
 
You are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this information statement or in documents incorporated in this information statement. We assume no obligation to update any forward-looking statements contained in this information statement.
 
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 THE SPIN-OFF
 
Background and Reasons for the Spin-Off
 
The board of directors of First Data regularly reviews the various businesses conducted by First Data to ensure that resources are deployed and activities are pursued in the best interests of its stockholders. On January 26, 2006, First Data announced that its board of directors had authorized in principle the distribution of our common stock to First Data’s stockholders in a tax-free spin-off. This authorization is subject to final approval by the First Data board of directors, which approval is subject to, among other things, receipt of a private letter ruling from the Internal Revenue Service and an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in each case with respect to the tax-free nature of the spin-off. In making the determination to spin off our businesses, the board of directors of First Data acknowledged that the principal focus of First Data is on serving the financial transaction processing and card-issuing needs of merchants and financial institutions, and that our business, serving the money transfer and payment needs of consumers, did not fit within that focus. The board of directors of First Data recognized that the spin-off would permit us to focus our attention and financial resources on our money transfer and consumer payments businesses.
 
The operating and financial characteristics of our businesses are different from those of First Data’s businesses. The services we provide and consumers we serve are different from the services that First Data provides and the customers it serves. We are focused on enhancing our position as a provider of money transfers and consumer payments. First Data, on the other hand, is focused on enhancing its position as a provider of payment processing services to merchants and financial institutions and a provider of card issuing and related services to financial institutions.
 
In the future, Western Union and First Data expect to face different business challenges. To be successful, we believe we will need to expand and diversify our consumer-to-consumer global distribution network, build our brands, enhance the consumer experience, expand the channels by which consumers can send or receive money and diversify our consumer-to-consumer service offerings, expand into new biller and other business and government relationships and expand the international presence of our consumer-to-business offerings. First Data believes that it will need to acquire new merchant relationships, cross sell products and services into existing relationships and leverage core processing capabilities for future expansion into other markets.
 
First Data and we believe that the spin-off of our businesses from First Data will provide several opportunities and benefits that are expected to enhance stockholder value, including the following:
 
 	•	 	Business Focus . Each company will be better able to focus its attention and financial resources on its own distinct businesses, opportunities, markets and challenges so that each can pursue the most appropriate long-term growth opportunities and business strategies.	
 
 	•	 	Capital Flexibility . We will be able to invest any excess cash flow into growth initiatives of our business, including continued international expansion, increased investments in the Western Union brand, expansion of our service offerings and acquisitions, rather than having a part of our cash flow reinvested into First Data. In addition, we will have direct access to the public capital markets to allow us to seek to finance our operations and growth without having to compete with other First Data businesses with respect to that financing.	
 
 	•	 	Employee Incentives . We will be able to develop better incentive programs to attract and retain key employees through the use of stock-based and performance-based incentive plans that more directly link their compensation with our financial performance. These programs will be designed to more directly reward employees based on our performance.	
 
 	•	 	Competition with First Data’s Customer Base . We believe we will benefit from being able to provide our services without being restrained by the conflicts doing so may create with First Data’s clients. We are evolving to become a competitor of First Data’s clients, creating channel conflicts that may hinder	
 
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 	the success of both businesses. We currently target many of the same consumers that First Data’s financial institution clients target with our offering of money transfers, money orders, payments to businesses and governments, prepaid and other financial services.	
 
 	•	 	Market Recognition . The investment community, including analysts, stockholders and prospective investors in each company, will be better able to evaluate the merits and future prospects of each company, thereby enhancing the likelihood that each company will receive appropriate market recognition of its performance and potential.	
 
Manner of Effecting the Spin-Off
 
The general terms and conditions of the spin-off will be set forth in the separation and distribution agreement to be entered into by First Data and us. For a description of the expected terms of that agreement, see “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement.”
 
Overview . The spin-off will be accomplished through a series of transactions, pursuant to the terms and conditions of the separation and distribution agreement, by which First Data will contribute to us the subsidiaries that operate its money transfer and consumer payments businesses, as well as related assets, including intellectual property, real estate and First Data’s interest in one of our agents, and distribute to its stockholders of record all of the outstanding shares of our common stock. As discussed under “—Trading of First Data Common Stock After the Record Date and Prior to the Distribution,” if a holder of record of First Data common stock sells those shares in the “regular way” market after the record date and prior to the spin-off, that stockholder also will be selling the right to receive shares of Western Union common stock in the distribution. The distribution will be made in book-entry form on the basis of one share of Western Union common stock for each share of First Data common stock held on the record date of September [•], 2006. First Data will instruct Wells Fargo Bank Minnesota, National Association, as distribution agent, to record the distribution on the distribution date to the holders of First Data common stock at the close of business on the record date (or their designated transferees). There are no fractional shares of First Data common stock and, accordingly, no fractional shares of Western Union common stock will be distributed. Each share of Western Union common stock that is distributed will be validly issued, fully paid and nonassessable and free of preemptive rights.
 
Book Entry Statements. A book-entry account statement reflecting your ownership of shares of Western Union common stock will be mailed to you, or your brokerage account will be credited for the shares, on or about [•], 2006. We will not issue physical stock certificates, even if requested.
 
Results of the Spin-Off
 
Following the spin-off, Western Union will be an independent, publicly traded company owning and operating what had previously been First Data’s money transfer and consumer payments businesses. We expect to have approximately [•] holders of shares of our common stock and approximately [•] million shares of our common stock issued and outstanding immediately following the spin-off based on the distribution ratio described above and the anticipated number of beneficial stockholders and outstanding First Data shares on September [•], 2006, the record date. The actual number of shares to be distributed will be determined based on the number of shares of First Data common stock outstanding on the record date.
 
You will not be required to make any payment for the shares of Western Union common stock you receive, nor will you be required to surrender or exchange your shares of First Data common stock or take any other action in order to receive Western Union common stock. The spin-off will not affect the number of outstanding First Data shares or any rights of First Data stockholders, although it will affect the market value of the outstanding First Data common stock.
 
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Important Federal Income Tax Consequences
 
The following section discusses the material United States federal income tax consequences of the spin-off. This discussion is based on the Internal Revenue Code, Treasury regulations promulgated under the Internal Revenue Code and judicial and administrative interpretations thereof, all as in effect as of the date of this information statement, all of which are subject to change at any time, possibly with retroactive effect. The discussion assumes that the spin-off will be consummated in accordance with the separation and distribution agreement and as further described in this information statement. This is not a complete description of all of the consequences of the spin-off and, in particular, may not address United States federal income tax considerations applicable to holders of First Data common stock subject to special treatment under United States federal income tax law. Holders of First Data common stock subject to special treatment include, for example, financial institutions, dealers in securities, traders in securities who elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt entities, partnerships and other pass-through entities, holders who acquired their shares pursuant to the exercise of an employee stock option or right or otherwise as compensation, and holders who hold First Data common stock as part of a “hedge,” “straddle,” “conversion” or “constructive sale” transaction. In addition, this discussion does not address the United States federal income tax consequences to holders of First Data common stock who are not United States holders or who do not hold First Data common stock as a capital asset. No information is provided in this information statement with respect to the tax consequences of the spin-off under applicable foreign or state or local laws. For purposes of this information statement, a “United States holder” means any beneficial owner of First Data common stock, other than an entity or arrangement treated as a partnership for United States federal income tax purposes, that for United States federal income tax purposes is:
 
 	•	 	an individual who is a citizen or resident of the United States;	
 
 	•	 	a corporation (or other entity taxable as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or of any political subdivision thereof;	
 
 	•	 	an estate, the income of which is subject to United States federal income taxation regardless of its source; or	
 
 	•	 	a trust if it (i) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) was in existence on August 20, 1996 and has properly elected under applicable Treasury regulations to be treated as a United States person.	
 
Holders of First Data common stock are urged to consult with their tax advisors regarding the tax consequences of the spin-off to them, as applicable, including the effects of United States federal, state and local tax laws, as well as foreign and other tax laws.
 
The Spin-Off
 
The spin-off is conditioned upon First Data’s receipt of a private letter ruling from the Internal Revenue Service, in form and substance satisfactory to First Data, to the effect that, among other things, the spin-off (including certain related transactions) will be tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code. Although a private letter ruling from the Internal Revenue Service generally is binding on the Internal Revenue Service, if the factual assumptions or representations made in the private letter ruling request are untrue or incomplete in any material respect, then First Data will not be able to rely on the ruling. Furthermore, the Internal Revenue Service will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under section 355 of the Internal Revenue Code. Rather, the private letter ruling will be based upon representations by First Data that those requirements have been satisfied, and any inaccuracy in such representations could invalidate the private letter ruling.
 
The spin-off is also conditioned upon the receipt by First Data of an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in form and substance satisfactory to First Data, to the
 
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effect that the spin-off (including certain related transactions) will be tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code. The opinion will rely on the Internal Revenue Service private letter ruling as to matters covered by the ruling. The opinion will be based on, among other things, certain assumptions and representations as to factual matters made by First Data and us which, if untrue or incomplete in any material respect, would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the Internal Revenue Service or the courts, and the Internal Revenue Service or the courts may not agree with the opinion.
 
Assuming (i) the receipt and continued validity of the private letter ruling from the Internal Revenue Service, (ii) the correctness of counsel’s opinion and (iii) that the distribution of our common stock to First Data stockholders in connection with the spin-off is not otherwise disqualified as tax-free, the material United States federal income tax consequences of the spin-off will be as follows:
 
 	•	 	neither the contribution nor the distribution will result in any taxable income, gain or loss to First Data;	
 
 	•	 	no taxable income, gain or loss will be recognized by any United States holder solely as the result of the receipt of our common stock in the distribution;	
 
 	•	 	the aggregate tax basis of the First Data common stock and our common stock in the hands of a United States holder immediately after the distribution will be the same as the aggregate tax basis of the First Data common stock held by such holder immediately before the distribution, allocated between the First Data common stock and our common stock in proportion to their relative fair market values on the date of the distribution; and	
 
 	•	 	the holding period of our common stock received by a United States holder will include the holding period of such holder’s First Data common stock, provided that the First Data common stock is held as a capital asset on the date of the distribution.	
 
As described above, the private letter ruling and the opinion will be based, in part, on certain assumptions and representations as to factual matters. If any of those assumptions or representations is untrue or incomplete as of the effective time of the spin-off, the tax consequences of the spin-off could differ materially from those described above. In addition, opinions of counsel neither bind the Internal Revenue Service or any court, nor preclude the Internal Revenue Service from adopting a contrary position.
 
If the spin-off were not to qualify for tax-free treatment under sections 355, 368 and related provisions of the Internal Revenue Code, First Data would recognize taxable gain equal to the excess of the fair market value of the consideration received by First Data in the contribution over First Data’s tax basis in the assets contributed to us in the contribution and, under certain circumstances, we would be required under the tax allocation agreement to indemnify First Data for all or a portion of that liability. See “Our Relationship with First Data After the Spin-Off—Tax Allocation Agreement.” In addition, each United States holder who receives our common stock in the spin-off would be treated as receiving a taxable distribution in an amount equal to the fair market value of our common stock received.
 
First Data may incur some tax cost in connection with the spin-off (as a result of certain intragroup asset transfers and certain differences between federal and state tax rules), whether or not the spin-off qualifies for tax-free treatment under sections 355, 368 and related provisions of the Internal Revenue Code.
 
Effect of Certain Acquisitions of First Data Common Stock or Our Common Stock
 
Even if the spin-off otherwise qualifies as a tax-free distribution under section 355 of the Internal Revenue Code, the spin-off may result in significant United States federal income tax liabilities to First Data if 50% or more of First Data stock or our stock (in each case by vote or value) is acquired, directly or indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the spin-off. For purposes of this test, any acquisitions of First Data stock or our stock, or any agreement, understanding, arrangement or substantial negotiations regarding an acquisition of First Data stock or our stock, within two years before or after the spin-off are subject to special scrutiny.
 
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The process for determining whether a change in control prohibited under the foregoing rules has occurred is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. If a direct or indirect acquisition of First Data stock or our stock resulted in a change in control prohibited under those rules, First Data (but not its stockholders) would recognize taxable gain as described above. With respect to taxes and other liabilities that could be imposed in connection with the spin-off (and certain related transactions), under the terms of the tax allocation agreement we will be liable to First Data for any such taxes or liabilities resulting from actions taken by or with respect to us, one of our affiliates or any person that, after the spin-off, is an affiliate thereof. See “Our Relationship with First Data After the Spin-Off—Tax Allocation Agreement” beginning on page [•].
 
Information Reporting
 
Current Treasury regulations require each holder of First Data common stock who receives our common stock in the distribution to attach to his, her or its federal income tax return for the year in which the spin-off occurs a detailed statement setting forth the data that may be appropriate in order to show the applicability of section 355 of the Internal Revenue Code to the spin-off. First Data will provide the appropriate information to each stockholder of record.
 
The foregoing sets forth the material United States federal income tax consequences of the spin-off under current law. This discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. Moreover, it does not address any non-income tax or any foreign, state or local tax consequences of the spin-off. Each beneficial owner of First Data common stock is encouraged to consult his, her or its tax advisor as to the particular consequences of the spin-off to the stockholder, including the application of state, local and foreign tax laws, and as to possible prospective or retroactive changes in tax law that might affect the tax consequences described above.
 
Market for Our Common Stock; Trading of Our Common Stock Prior to the Spin-Off
 
There is currently no trading market for our common stock. We have applied to have our common stock authorized for listing on the New York Stock Exchange under the symbol “WU.” We expect that a limited market, commonly known as a “when-issued” trading market, for our common stock will begin on September [•], 2006. The term “when-issued” means that shares can be traded prior to the time shares are available or issued. We expect that on the first trading day following the distribution date, “when-issued” trading in our common stock will end and “regular way” will begin. “Regular way” trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of a trade. We have not and will not set the initial price of our common stock; that price will be established by the public markets.
 
We cannot predict the price at which our common stock will trade after the spin-off. In fact, the combined trading prices of a share of our common stock and a share of First Data common stock after the spin-off may not equal or exceed the trading price of a share of First Data common stock immediately prior to the spin-off. The price at which our common stock trades is likely to fluctuate significantly, particularly until an orderly public market develops. Prices for our common stock will be determined in the public markets and may be influenced by many factors, many of which are beyond our control, including:
 
 	•	 	lack of a trading history;	
 
 	•	 	changes in expectations concerning our future financial performance and the future performance of the money transfer and consumer payments industries in general, including financial estimates and recommendations by securities analysts;	
 
 	•	 	our financial results and differences between our actual financial and operating results and those expected by investors and analysts;	
 
 	•	 	strategic moves by us or our competitors, such as acquisitions or restructurings;	
 
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 	•	 	changes in the regulatory environment governing our business;	
 
 	•	 	our capital structure, including the amount of our indebtedness;	
 
 	•	 	general economic, industry and market conditions;	
 
 	•	 	the depth and liquidity of the market for our common stock;	
 
 	•	 	fluctuations in currency exchange rates;	
 
 	•	 	our dividend policy;	
 
 	•	 	investor perceptions of our business and us; and	
 
 	•	 	the impact of the factors referred to in “Risk Factors.”	
 
We have appointed Wells Fargo Bank Minnesota, National Association to serve as transfer agent and registrar for our common stock.
 
Shares of our common stock distributed to holders of First Data common stock in connection with the spin-off will be transferable under the Securities Act of 1933, as amended, which we refer to as the Securities Act, except for shares received by persons who may be deemed to be our affiliates. Persons who may be deemed to be our affiliates after the spin-off generally include individuals or entities that control, are controlled by or are under common control with us and may include certain of our officers, directors or principal stockholders. After we become a publicly traded company, securities held by our affiliates will be subject to the resale restrictions under the Securities Act. Our affiliates will be permitted to sell shares of our common stock only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.
 
Trading of First Data Common Stock After the Record Date and Prior to the Distribution
 
Beginning on or shortly before the record date and until the distribution date, there will be two concurrent markets in which to trade First Data common stock: a “regular way” market and an “ex-distribution” market. Shares of First Data common stock that trade on the regular way market will trade with an entitlement to shares of our common stock distributed in connection with the spin-off. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed in connection with the spin-off. Therefore, if you owned shares of First Data common stock at 5:00 p.m., New York City time, on the record date and sell those shares on the regular way market prior to the distribution, you also will be selling the shares of our common stock that would have been distributed to you in connection with the spin-off. If you sell those shares of First Data common stock on the ex-distribution market prior to the distribution, you will still receive the shares of our common stock that were to be distributed to you pursuant to your ownership of the shares of First Data common stock.
 
Distribution Conditions and Termination
 
We expect that the distribution will be effective, and the spin-off complete, on the distribution date, [•], 2006, provided that, among other things:
 
 	•	 	the SEC has declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act and no stop order relating to our Form 10 registration statement is in effect;	
 
 	•	 	the SEC has declared effective under the Securities Act our registration statement on Form S-1 registering the exchange notes to be sold by the investment banks, and no stop order relating to the registration statement is in effect;	
 
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 	•	 	the SEC has declared effective under the Securities Act our registration statement on Form S-1 registering shares of Western Union common stock subject to Western Union stock options to be issued to current and former employees and directors of subsidiaries of First Data (other than us) who will not become our employees as a result of the adjustment of First Data stock options in the spin-off, which we refer to as the stock options registration statement, and no stop order relating to the stock options registration statement is in effect;	
 
 	•	 	First Data and Western Union have received all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the distribution;	
 
 	•	 	First Data and Western Union have received all material permits, registrations, clearances and consents from governmental authorities and third persons necessary to effect the spin-off and to permit the operation of our businesses thereafter;	
 
 	•	 	First Data has received a private letter ruling from the Internal Revenue Service (which has not been revoked or modified in any material respect), and an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in each case in form and substance satisfactory to First Data, to the effect that, among other things, the spin-off (including certain related transactions) will be tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code;	
 
 	•	 	the New York Stock Exchange has approved our common stock for listing, subject to official notice of issuance;	
 
 	•	 	our subsidiary, FFMC, has paid a dividend to First Data in the form of a promissory note in an aggregate principal amount of approximately $[•] billion, which dividend is expected to be paid two days prior to the distribution date;	
 
 	•	 	simultaneously with the payment of such dividend by FFMC, First Data has transferred to FFMC the capital stock of the subsidiary of First Data that owns Vigo;	
 
 	•	 	First Data has completed the contribution to us of the other subsidiaries that own and/or operate our money transfer and consumer payments businesses and related assets and we have assumed the related liabilities and transferred to First Data (i) approximately $[•] million in cash, (ii) the exchange notes with an aggregate principal amount of at least $800 million and (iii) shares of our common stock sufficient to effect the distribution;	
 
 	•	 	we have transferred to First Data the subsidiaries and related assets we own that are not part of our money transfer and consumer payments businesses and First Data has assumed the liabilities associated with such related assets;	
 
 	•	 	an independent firm acceptable to First Data, in its sole and absolute discretion, has delivered one or more opinions to the board of directors of each of First Data and Western Union confirming the solvency and financial viability of Western Union and First Data, which opinions will be in form and substance satisfactory to First Data, in its sole and absolute discretion, and shall not have been withdrawn or rescinded;	
 
 	•	 	no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the spin-off or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the separation and distribution agreement, is in effect;	
 
 	•	 	First Data and Western Union have each received credit ratings from the credit rating agencies that are satisfactory to First Data in its sole and absolute discretion; and	
 
 	•	 	no other events or developments shall have occurred that, in the judgment of the board of directors of First Data, in its sole and absolute discretion, would result in the spin-off having a material adverse effect on First Data or its stockholders.	
 
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The fulfillment of the foregoing conditions will not create any obligation on First Data’s part to effect the distribution, and the board of directors of First Data has reserved the right to amend, modify or abandon the distribution and the related transactions at any time prior to the distribution date. The board of directors of First Data may waive any of these conditions in its sole and absolute discretion.
 
Reason for Furnishing this Information Statement
 
This information statement is being furnished solely to provide information to stockholders of First Data who will receive shares of Western Union common stock in connection with our spin-off. It is not provided as an inducement or encouragement to buy or sell any of our securities. You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information.
 
Accounting Treatment
 
The spin-off will be accounted for by First Data on a historical basis, and no gain or loss will be recorded.
 
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 DIVIDEND POLICY
 
It is currently contemplated that following the spin-off, we will pay a cash dividend on our common stock with respect to the first full fiscal quarter following the date the spin-off is completed in an amount to be determined prior to the spin-off. However, the declaration and amount of future dividends will be determined by our board of directors and will depend on our financial condition, earnings, capital requirements, legal requirements, regulatory constraints, industry practice and any other factors that our board of directors believes are relevant. In addition, we will be a holding company with no material assets other than the stock of our subsidiaries. Accordingly, our ability to pay dividends will be dependent on our receiving dividends from our operating subsidiaries. Many of our operating subsidiaries are highly regulated and may be subject to restrictions on their ability to pay dividends to us.
 
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 FINANCING
 
We currently expect that in connection with the spin-off, and in consideration for the contribution, we will transfer to First Data:
 
 	•	 	approximately $[•] million in cash, which will be financed;	
 
 	•	 	the exchange notes with an aggregate principal amount of at least $800 million; and	
 
 	•	 	shares of our common stock sufficient to effect the distribution.	
 
In addition, two days prior to the distribution date, FFMC will pay a dividend to First Data in the form of a promissory note in an aggregate principal amount of approximately $[•] billion.
 
In connection with these transactions we will enter into the following borrowing arrangements.
 
Notes
 
As noted above, we will transfer to First Data the exchange notes with an aggregate principal amount of at least $800 million. First Data has informed us that, shortly after the distribution, it expects to exchange the exchange notes with investment banks for indebtedness of First Data that the investment banks will hold at that time. First Data expects that, shortly after completion of the expected debt exchange, the investment banks will sell the exchange notes in a public or private offering. We will not receive any proceeds from the issuance of the exchange notes to First Data, their transfer to the investment banks or their subsequent sale by the investment banks.
 
FFMC Bridge Loan Facility
 
We expect that on the distribution date or shortly thereafter FFMC will repay the $[•] billion promissory note it issues to First Data with borrowings under a 364 day bridge loan facility it will enter into on or shortly after the distribution date. The Western Union Company is considering and, subject to market and other conditions following the spin-off, expects to refinance the amounts borrowed by FFMC under the bridge loan with proceeds from debt The Western Union Company will issue or amounts The Western Union Company will otherwise borrow following the distribution date. However, we do not have any agreements or arrangements with any financial institution or other third parties with respect to any such refinancing and there can be no assurance that The Western Union Company will be able to refinance the borrowings under the FFMC bridge loan.
 
Credit Facility
 
We also expect to enter into a credit facility with certain financial institutions on the distribution date that will be used for general corporate purposes. We do not expect to incur any borrowings under the credit facility in connection with the spin-off.
 
Aggregate Indebtedness
 
As a result of the transactions described above, following the spin-off we expect to have approximately $3.6 billion in combined indebtedness. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.
 
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 CAPITALIZATION
 
The following table sets forth our capitalization as of June 30, 2006 on a historical basis and on a pro forma basis to give effect to the pro forma adjustments included in our unaudited pro forma combined financial statements. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable; however, such adjustments are subject to change based on the finalization of the terms of the spin-off and the transaction agreements. In addition, such adjustments are estimates and may not prove to be accurate.
 
You should read this table together with “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Combined Financial Statements” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement.

  	  	As of June 30, 2006	 	
 	  	Historical	 	 	Pro
Forma	 	
(in millions, except per share amounts)	  	(unaudited)	 	
Liabilities:	  				 				
Debt (a)	  	$	—  	 	 	$	3,600.0	 	
			
Net investment in The Western Union Company (stockholders’ deficiency):	  				 				
Preferred stock, $0.01 par value; 10 shares authorized pro forma; no shares issued and outstanding pro forma	  	 	—  	 	 	 	—  	 	
Common stock, $0.01 par value; 2,000 shares authorized pro forma; 765.2 shares issued and outstanding pro forma (b)	  	 	—  	 	 	 	7.7	 	
Capital deficiency (c)	  	 	—  	 	 	 	(524.8	)	
Net investment in The Western Union Company (c)	  	 	3,312.6	 	 	 	—  	 	
Accumulated other comprehensive loss	  	 	(59.1	)	 	 	(59.1	)	
	  	 	 	 	 	 	 	 	
Total net investment in The Western Union Company (stockholders’ deficiency) (d)	  	 	3,253.5	 	 	 	(576.2	)	
	  	 	 	 	 	 	 	 	
Total capitalization	  	$	3,253.5	 	 	$	3,023.8	 	

(a)	Represents the assumed incurrence of $3.6 billion in combined indebtedness in connection with the spin-off. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.	
(b)	Represents the expected distribution of 765.2 million shares of our common stock to holders of First Data common stock based on the number of shares of First Data common stock outstanding at June 30, 2006.	
(c)	Represents the elimination of First Data’s net investment in us and the capital deficiency that will result based on the payment to First Data of $3.6 billion in the form of a combination of cash and our debt securities and the forgiveness of certain intercompany balances between First Data and us.	
(d)	Certain of our historical net assets are restricted and are included within the accounts of companies combined in our historical combined financial statements. These restricted net assets do not exceed $60 million.	
 
Our ability to issue additional stock will be constrained because the issuance of additional stock might cause the spin-off to be taxable to First Data if 50% or more of our stock (by vote or value) is treated as having been acquired, directly or indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the spin-off. Under the tax allocation agreement we might be required to indemnify First Data against any such tax imposed on First Data as a result of acquisitions of our stock. See “The Spin-Off—Important Federal Income Tax Consequences—Effect of Certain Acquisitions of First Data Common Stock or Our Common Stock” for a more detailed discussion.
 
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 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
The unaudited pro forma combined financial statements of Western Union presented below have been derived from our audited combined financial statements for the year ended December 31, 2005 and from our unaudited combined financial statements for the six months ended June 30, 2006. The pro forma adjustments and notes to the pro forma combined financial statements give effect to the distribution of Western Union common stock by First Data and the other transactions contemplated by the separation and distribution agreement. These unaudited pro forma combined financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and the notes to those statements included elsewhere in this information statement.
 
The unaudited pro forma combined statements of income for the year ended December 31, 2005 and the six months ended June 30, 2006 have been prepared as though the spin-off had occurred as of January 1, 2005. The unaudited pro forma combined balance sheet at June 30, 2006 has been prepared as though the spin-off had occurred on June 30, 2006. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable; however, such adjustments are subject to change based on the finalization of the terms of the spin-off and the transaction agreements. See “Our Relationship with First Data After the Spin-off—Separation and Distribution Agreement.” In addition, such adjustments are estimates and may not prove to be accurate.
 
The pro forma adjustments include the following items:
 
 	•	 	The contribution by First Data to us of specified assets related to First Data’s money transfer and consumer payments businesses and the assumption by us of specified liabilities related to such businesses.	
 
 	•	 	The issuance by us to First Data, in consideration for the contribution, of 765.2 million shares of our common stock.	
 
 	•	 	The distribution of 765.2 million shares of our common stock to holders of First Data common stock.	
 
 	•	 	The assumed incurrence of $3.6 billion of combined indebtedness in connection with the spin-off and the payment to First Data of $3.6 billion in the form of a combination of cash and our debt securities. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.	
 
 	•	 	The assumed cash settlement of $778.8 million of intercompany notes and related accrued interest of $32.4 million owed by First Data to us and $52.2 million of intercompany notes and related accrued interest of $2.2 million owed by us to First Data. We will also pay First Data $16.8 million to settle certain foreign currency swap agreements with First Data related to certain notes receivable with affiliates on the date of spin-off.	
 
 	•	 	The forgiveness by us of $153.8 million of intercompany balances owed by First Data to us, and the forgiveness by an affiliate of First Data of an intercompany note owed by us to that affiliate of $11.3 million, which collectively will be treated as a net dividend to First Data for accounting and tax purposes.	
 
 	•	 	Estimated incremental costs associated with operating as a stand-alone company of $60 million annually.	
 
The share numbers are based on First Data share numbers as of June 30, 2006, and the dollar and settlement amounts are based on our balances as of June 30, 2006.
 
Our unaudited pro forma combined statements of income do not include adjustments for certain other costs of operating as a stand-alone company which we estimate, subject to the finalization of our plans, to be between
 
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$5 million and $15 million annually, including higher corporate branding and global affairs, information technology, procurement and other expenses related to being a stand-alone company.
 
Our unaudited pro forma combined statements of income do not give effect to initial expenses directly attributable to the spin-off because of their non-recurring nature. A significant portion of these non-recurring charges to effect the separation will be incurred by First Data, such as investment banker fees, outside legal and accounting fees relating to the spin-off, office move costs, costs to separate information systems and temporary consulting costs. We will incur separation costs that have a future benefit to our company such as recruiting and relocation expenses associated with hiring key senior management positions new to our company, other employee compensation expenses and temporary labor used to develop ongoing processes. We estimate total non-recurring separation charges that our company will incur, which are not included in our unaudited pro forma combined statements of income, to be approximately $20 million to $25 million. We anticipate that substantially all of these costs will be incurred within 12 months of the spin-off. See “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement—Expenses.”
 
The pro forma adjustments are based upon available information and assumptions that management believes are reasonable based on our current plans and expectations; however, such adjustments are subject to change based on the finalization of the terms of the spin-off and the transaction agreements. Additionally, this information is forward looking information and is subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See “Forward-Looking Statements” and “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement” on pages [    ] and [    ], respectively, for further information.
 
The unaudited pro forma combined financial statements are for illustrative purposes only and do not reflect what our financial position and results of operations would have been had the spin-off occurred on the dates indicated and are not necessarily indicative of our future financial position and future results of operations.
 
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THE WESTERN UNION COMPANY
Unaudited Pro Forma Combined Statements of Income
Year Ended December 31, 2005

 	  	Historical	 	 	Pro Forma
Adjustments	 	 	Pro Forma	 	
(in millions, except per share amounts)	  	(restated)	 	 	 	 	 	 	 	
Revenues:	  				 				 				
Transaction fees	  	$	3,354.8	 	 	$	—  	 	 	$	3,354.8	 	
Foreign exchange revenue	  	 	531.0	 	 	 	—  	 	 	 	531.0	 	
Commission and other revenues	  	 	102.1	 	 	 	—  	 	 	 	102.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	3,987.9	 	 	 	—  	 	 	 	3,987.9	 	
Expenses:	  				 				 				
Cost of services	  	 	2,118.9	 	 	 	—  	 	 	 	2,118.9	 	
Selling, general and administrative	  	 	599.8	 	 	 	60.0	(d)	 	 	659.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total expenses	  	 	2,718.7	 	 	 	60.0	 	 	 	2,778.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	1,269.2	 	 	 	(60.0	)	 	 	1,209.2	 	
Derivative gains/(losses), net	  	 	45.8	 	 	 	—  	 	 	 	45.8	 	
Foreign exchange effect on notes receivable from affiliates, net	  	 	(5.9	)	 	 	5.9	(a)	 	 	—  	 	
Interest income from affiliates, net	  	 	24.3	 	 	 	(24.3	)(a)	 	 	—  	 	
Interest expense	  	 	—  	 	 	 	(218.9	)(b)	 	 	(218.9	)	
Other income, net	  	 	10.7	 	 	 	—  	 	 	 	10.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	1,344.1	 	 	 	(297.3	)	 	 	1,046.8	 	
Provision for income taxes	  	 	416.7	 	 	 	(108.8	)(c)	 	 	307.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	927.4	 	 	$	(188.5	)	 	$	738.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Pro forma earnings per share:	  				 				 				
Basic (e)	  				 				 	$	0.97	 	
Diluted (e)	  				 				 	$	0.95	 	
Pro forma shares outstanding:	  				 				 				
Basic (e)	  				 				 	 	765.2	 	
Diluted (e)	  				 				 	 	776.9	 	
 
See accompanying notes.
 
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THE WESTERN UNION COMPANY
Unaudited Pro Forma Combined Statements of Income
Six Months Ended June 30, 2006

 	  	Historical	 	 	Pro Forma
Adjustments	 	 	Pro
Forma	 	
(in millions, except per share amounts)	  	 	 	
Revenues:	  				 				 				
Transaction fees	  	$	1,791.6	 	 	$	—  	 	 	$	1,791.6	 	
Foreign exchange revenue	  	 	309.6	 	 	 	—  	 	 	 	309.6	 	
Commission and other revenues	  	 	55.4	 	 	 	—  	 	 	 	55.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	2,156.6	 	 	 	—  	 	 	 	2,156.6	 	
Expenses:	  				 				 				
Cost of services	  	 	1,153.4	 	 	 	—  	 	 	 	1,153.4	 	
Selling, general and administrative	  	 	364.1	 	 	 	30.0	(d)	 	 	394.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total expenses	  	 	1,517.5	 	 	 	30.0	 	 	 	1,547.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	639.1	 	 	 	(30.0	)	 	 	609.1	 	
Derivative (losses)/gains, net	  	 	(27.2	)	 	 	—  	 	 	 	(27.2	)	
Foreign exchange effect on notes receivable from affiliates, net	  	 	(4.1	)	 	 	4.1	(a)	 	 	—  	 	
Interest income from affiliates, net	  	 	23.5	 	 	 	(23.5	)(a)	 	 	—  	 	
Interest expense	  	 	—  	 	 	 	(109.4	)(b)	 	 	(109.4	)	
Other income, net	  	 	17.4	 	 	 	—  	 	 	 	17.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	648.7	 	 	 	(158.8	)	 	 	489.9	 	
Provision for income taxes	  	 	210.0	 	 	 	(56.0	)(c)	 	 	154.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	438.7	 	 	$	(102.8	)	 	$	335.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Pro forma earnings per share:	  				 				 				
Basic (e)	  				 				 	$	0.44	 	
Diluted (e)	  				 				 	$	0.43	 	
Pro forma shares outstanding:	  				 				 				
Basic (e)	  				 				 	 	765.2	 	
Diluted (e)	  				 				 	 	776.9	 	
 
See accompanying notes.
 
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THE WESTERN UNION COMPANY
Unaudited Pro Forma Combined Balance Sheet
As of June 30, 2006
 	 	
(in millions, except per share amounts)	  	Historical	 	 	Pro Forma
Adjustments	 	 	Pro
Forma	 	
Assets	  				
Cash and cash equivalents	  	$	655.8	 	 	$	740.0	(f)	 	$	1,395.8	 	
Settlement assets	  	 	982.1	 	 	 	—  	 	 	 	982.1	 	
Receivables from affiliated companies, net	  	 	167.2	 	 	 
 
 	(32.4
(153.8
16.8	)(f)
)(g)
(f)	 	 	—  	 	
	  				 	 	2.2	(f)	 				
Notes receivable from affiliated companies	  	 	778.8	 	 	 	(778.8	)(f)	 	 	—  	 	
Property and equipment, net	  	 	89.4	 	 	 	65.5	(h)	 	 	154.9	 	
Goodwill	  	 	1,599.3	 	 	 	—  	 	 	 	1,599.3	 	
Other intangible assets, net	  	 	232.9	 	 	 	—  	 	 	 	232.9	 	
Other assets	  	 	490.1	 	 	 	14.4	(i)	 	 	504.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total assets	  	$	4,995.6	 	 	$	(126.1	)	 	$	4,869.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Liabilities and net investment in The Western Union Company (stockholders’ deficiency)	  				 				 				
Liabilities:	  				 				 				
Accounts payable and accrued liabilities	  	$	220.5	 	 	$	167.1	(j)	 	$	387.6	 	
Settlement obligations	  	 	980.9	 	 	 	—  	 	 	 	980.9	 	
Pension obligations	  	 	68.9	 	 	 	—  	 	 	 	68.9	 	
Deferred tax liability, net	  	 	269.5	 	 	 	—  	 	 	 	269.5	 	
Notes payable to affiliated companies	  	 	63.5	 	 	 
 	(52.2
(11.3	)(f)
)(g)	 	 	—  	 	
Other liabilities	  	 	138.8	 	 	 	—  	 	 	 	138.8	 	
Debt	  	 	—  	 	 	 	3,600.0	(k)	 	 	3,600.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities	  	 	1,742.1	 	 	 	3,703.6	 	 	 	5,445.7	 	
				
Net investment in The Western Union Company (stockholders’ deficiency):	  				 				 				
Preferred stock, $0.01 par value; 10 shares authorized pro forma; no shares issued and outstanding pro forma	  	 	—  	 	 	 	—  	 	 	 	—  	 	
Common stock, $0.01 par value; 2,000 shares authorized pro forma; 765.2 shares issued and outstanding pro forma	  	 	—  	 	 	 	7.7	(l)	 	 	7.7	 	
Capital deficiency	  	 	—  	 	 	 	(524.8	)(m)	 	 	(524.8	)	
Net investment in The Western Union Company	  	 	3,312.6	 	 	 	(3,312.6	)(m)	 	 	—  	 	
Accumulated other comprehensive loss	  	 	(59.1	)	 	 	—  	 	 	 	(59.1	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total net investment in The Western Union Company (stockholders’ deficiency) (n)	  	 	3,253.5	 	 	 	(3,829.7	)	 	 	(576.2	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and net investment in The Western Union Company (stockholders’ deficiency)	  	$	4,995.6	 	 	$	(126.1	)	 	$	4,869.5	 	

See accompanying notes.
 
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THE WESTERN UNION COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
(a)	Represents interest income and expense and fluctuations in foreign exchange during the period on notes receivable due from First Data to us and notes payable due to First Data from us.	
 
(b)	Reflects the adjustment to record interest expense on $3.6 billion of combined indebtedness assumed to be incurred in connection with the spin-off. Pro forma interest expense was calculated based on an assumed interest rate of 6.0% and also includes estimated amortization on approximately $14.4 million of assumed debt issuance costs. The amount of interest expense will be dependent on the rate obtained, the term of the debt, the amount of debt actually issued and the amount of debt issuance costs incurred. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement. A 1/8% change in interest rates would result in a $4.5 million change in annual interest expense.	
 
(c)	Represents the tax effect of pro forma adjustments using our statutory tax rate of 37.6% for the six months ended June 30, 2006 and 37.5% for the year ended December 31, 2005 for United States transactions, which represent the majority of the pro forma adjustments, and the applicable international tax rate for the international portion of the pro forma adjustments.	
 
(d)	Represents the estimated incremental costs associated with operating as a stand-alone company ($77 million for the six months ended June 30, 2006 and $129 million for the year ended December 31, 2005, partially offset by the elimination of related 2005 corporate overhead allocated by First Data of $47 million for the six months ended June 30, 2006 and $69 million for the year ended December 31, 2005 resulting in an adjustment to our unaudited pro forma combined statements of income of $30 million for the six months ended June 30, 2006 and $60 million for the year ended December 31, 2005). The estimated costs associated with operating as a stand-alone company include for the six months ended June 30, 2006 and the year ended December 31, 2005:	
 
 	(i)	$49 million and $76 million, respectively, related to staff additions and increases in salaries to replace First Data support, which were calculated based on approved headcounts, expected compensation plans and current market compensation assumptions;	
 
 	(ii)	$10 million and $19 million, respectively, related to corporate governance, including board of directors compensation and expenses, insurance costs, audit fees, annual report and proxy printing and filing fees, stock exchange fees, corporate compliance fees, and tax advisory fees, which were estimated using First Data historical costs, and adjusted for expected variations as applicable, or from insurance premium cost projections received from our insurance broker based on current market conditions;	
 
 	(iii)	$6 million and $13 million, respectively, related to increased depreciation, amortization and maintenance costs in connection with information technology infrastructure investments resulting from the spin-off, which were calculated from a plan approved by management using vendor quotes as a basis;	
 
 	(iv)	$6 million and $12 million, respectively, related to corporate branding and global affairs, including increased costs to our company associated with assuming full support of the First Data/Western Union charitable foundation, other charitable contributions and other consulting costs, which were based on the foundation’s approved operating plans and historical costs of First Data and adjusted for expected variations as applicable;	
 
 	(v)	$2 million and $2 million, respectively, related to the administration of our benefit plans and payroll functions, which were estimated based upon written quotes received from potential providers; and	
 
 	(vi)	$4 million and $7 million, respectively, related to other corporate costs, including ongoing costs associated with treasury, mergers and acquisitions and corporate security activities and increased	
 
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 	depreciation relating to additional property and equipment purchases in connection with the spin-off, which were estimated using First Data’s historical costs and adjusted for expected variations as applicable.	
 
    	The information provided in the pro forma adjustment described in this footnote is forward looking information based on our current plans and expectations and is subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See “Forward-Looking Statements” on page [    ] for further information.	
 
(e)	The calculation of pro forma basic earnings per share and shares outstanding is based on the number of shares of First Data common stock outstanding as of June 30, 2006 adjusted for an assumed distribution ratio of one share of our common stock for every share of First Data common stock. The calculation of pro forma diluted earnings per share and shares outstanding for the periods presented is based on the number of shares of First Data common stock outstanding as of June 30, 2006 and diluted shares of common stock outstanding as of June 30, 2006 adjusted for the same assumed distribution ratio. This calculation may not be indicative of the dilutive effect that will actually result from the replacement of First Data stock-based awards held by our employees and employees of First Data or the grant of new stock-based awards. The number of dilutive shares of our common stock that will result from First Data stock options, restricted stock awards and restricted stock units held by our employees will not be determined until immediately after the spin-off. However, we currently expect the number of dilutive shares resulting from the replacement of our employees’ First Data stock options, restricted stock awards and restricted stock units could be greater than one dilutive share of our common stock after the spin-off for each dilutive share of First Data common stock held prior to the spin-off. See “Our Relationship with First Data After the Spin-Off—Employee Matters Agreement” on page [    ] for further information.	
 
(f)	Represents the assumed cash settlement of $778.8 million of intercompany notes and related accrued interest of $32.4 million owed by First Data to us and $52.2 million of intercompany notes and related accrued interest of $2.2 million owed by us to First Data based on balances outstanding at June 30, 2006. We currently plan to invest the net repayments on these notes overseas; however, repatriating these funds to the United States could result in additional taxes. We will also pay First Data $16.8 million to settle certain foreign currency swap agreements with First Data related to certain notes receivable from affiliates on the date of spin-off.	
 
(g)	Represents the forgiveness by us of $153.8 million of intercompany balances owed by First Data to us, and the forgiveness by an affiliate of First Data of an intercompany note owed by us to that affiliate of $11.3 million, which collectively will be treated as a net dividend to First Data for accounting and tax purposes, based on balances outstanding at June 30, 2006.	
 
(h)	Represents the contribution by First Data to us of our headquarters in Englewood, Colorado currently occupied by both First Data and us.	
 
(i)	Represents assumed debt issuance costs of $14.4 million.	
 
(j)	Represents the reclassification by us of certain tax and employee-related obligations from intercompany liabilities, including $148.2 million of federal, state and international tax liabilities and $18.9 million of accrued employee benefits and related administration costs, property taxes, and other accrued liabilities, which we will retain subsequent to the spin-off.	
 
(k)	Represents the assumed incurrence of $3.6 billion of combined indebtedness in connection with the spin-off.	
 
(l)	Represents the distribution of 765.2 million shares of our common stock to holders of First Data common stock.	
 
(m)	Represents the elimination of First Data’s net investment in us and the capital deficiency that will result based on the payment to First Data of $3.6 billion in the form of a combination of cash and our debt securities and the forgiveness of certain intercompany balances between First Data and us for the items noted in (g), (h) and (j) above.	
 
(n)	Certain of our historical net assets are restricted and are included within the accounts of companies combined in our historical combined financial statements. These restricted net assets do not exceed $60 million.	
 
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 SELECTED HISTORICAL COMBINED FINANCIAL DATA
 
The historical financial data have been prepared on a combined basis from First Data’s consolidated financial statements using the historical results of operations and assets and liabilities of First Data’s businesses and give effect to allocations of expenses from First Data. Our selected historical combined financial data are not necessarily indicative of our future financial position, future results of operations or future cash flows and do not reflect what our financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented.
 
The following tables set forth our selected historical financial data prepared on a combined basis. These tables present our money transfer and consumer payments businesses as they historically have been operated by First Data. You should read the information set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement. The statements of income and cash flow data for the years ended December 31, 2005, 2004 and 2003 and the balance sheet data as of December 31, 2005 and 2004 set forth below are derived from our audited combined financial statements included elsewhere in this information statement. The statements of income and cash flow data for the years ended December 31, 2002 and 2001 and the balance sheet data as of December 31, 2003, 2002 and 2001 set forth below are derived from our unaudited combined financial statements not included in this information statement. The statements of income and cash flow data for the six-month periods ended June 30, 2006 and 2005 and the balance sheet data as of June 30, 2006 set forth below are derived from our unaudited combined financial statements included elsewhere in this information statement. The balance sheet data as of June 30, 2005 set forth below are derived from our unaudited combined financial statements not included in this information statement. The unaudited interim combined financial statements are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2006. However, in the opinion of management, the unaudited interim combined financial statements include all adjustments (consisting of normal recurring accruals) that are necessary for the fair presentation of the results for the interim periods.
 
The selected historical combined financial data below reflect the restatement of our historical combined financial statements to account for changes in the fair value of our foreign currency forward contracts in the combined statements of income rather than accumulated other comprehensive income (loss) pursuant to SFAS No. 133, and to correct the translation of certain euro denominated notes receivable from affiliates and record the change in fair value of related foreign currency swap agreements with First Data, which will be settled in connection with the spin-off.

 	 	Six Months Ended
June 30,	 	Years Ended December 31,	 	
 	 	    2006    	 	    2005    	 	2005	 	2004	 	 	2003	 	 	2002	 	 	2001	 	
 	 	 	 	(restated)	 	(restated)	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	 	(unaudited)	 	 	 	 	 	 	 	 	 	(unaudited)	 	 	(unaudited)	 	
(in millions)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Statements of Income Data:	 			 			 			 				 				 				 				
Revenues (a)	 	$	2,156.6	 	$	1,900.4	 	$	3,987.9	 	$	3,547.6	 	 	$	3,151.6	 	 	$	2,743.4	 	 	$	2,314.4	 	
Operating expenses (a) (b) (c) (d)	 	 	1,517.5	 	 	1,287.8	 	 	2,718.7	 	 	2,435.5	 	 	 	2,148.6	 	 	 	1,919.9	 	 	 	1,651.0	 	
Operating income	 	 	639.1	 	 	612.6	 	 	1,269.2	 	 	1,112.1	 	 	 	1,003.0	 	 	 	823.5	 	 	 	663.4	 	
Other income/(expense), net (e)	 	 	9.6	 	 	42.0	 	 	74.9	 	 	(13.5	)	 	 	(40.4	)	 	 	(24.2	)	 	 	(1.1	)	
Income before income taxes (b) (c) (d)	 	 	648.7	 	 	654.6	 	 	1,344.1	 	 	1,098.6	 	 	 	962.6	 	 	 	799.3	 	 	 	662.3	 	
Net income (b) (c) (d)	 	 	438.7	 	 	451.6	 	 	927.4	 	 	751.6	 	 	 	633.7	 	 	 	494.1	 	 	 	407.9	 	
Depreciation and amortization (b)	 	 	49.1	 	 	39.0	 	 	79.5	 	 	79.2	 	 	 	78.4	 	 	 	60.2	 	 	 	92.9	 	
Cash Flow Data:	 			 			 			 				 				 				 				
Net cash provided by operating activities	 	 	481.9	 	 	467.9	 	 	1,002.8	 	 	930.2	 	 	 	792.8	 	 	 	607.5	 	 	 	526.1	 	
Dividends to parent company	 	 	—  	 	 	—  	 	 	417.2	 	 	659.8	 	 	 	324.2	 	 	 	486.8	 	 	 	1,047.3	 	
Key Indicators (unaudited):	 			 			 			 				 				 				 				
Consumer-to-consumer transactions (f)	 	 	69.89	 	 	54.09	 	 	118.52	 	 	96.66	 	 	 	81.04	 	 	 	67.84	 	 	 	55.78	 	
Consumer-to-business transactions (g)	 	 	120.71	 	 	102.30	 	 	215.11	 	 	192.57	 	 	 	179.39	 	 	 	145.01	 	 	 	113.79	 	
 
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 	 	As of June 30,	 	As of December 31,	
 	 	2006	 	2005	 	2005	 	2004	 	2003	 	2002	 	2001	
 	 	 	 	(restated)	 	(restated)	 	(restated)	 	(restated)	 	(restated)	 	(restated)	
 	 	(unaudited)	 	 	 	 	 	(unaudited)	 	(unaudited)	 	(unaudited)	
Balance Sheet Data:	 			 			 			 			 			 			 			
Settlement assets	 	$	982.1	 	$	745.7	 	$	929.1	 	$	716.9	 	$	586.4	 	$	475.9	 	$	445.5	
Total assets	 	 	4,995.6	 	 	3,770.5	 	 	4,606.4	 	 	3,330.2	 	 	3,029.9	 	 	2,472.4	 	 	2,189.8	
Settlement obligations	 	 	980.9	 	 	741.3	 	 	926.7	 	 	711.0	 	 	576.1	 	 	463.3	 	 	441.2	
Total liabilities	 	 	1,742.1	 	 	1,390.3	 	 	1,794.6	 	 	1,395.7	 	 	1,201.0	 	 	1,001.7	 	 	846.4	
Net investment in The Western Union Company	 	 	3,253.5	 	 	2,380.2	 	 	2,811.8	 	 	1,934.5	 	 	1,828.9	 	 	1,470.7	 	 	1,343.4	

(a)	In January 2002, our company adopted Emerging Issues Task Force 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred,” or “EITF 01-14,” which requires that reimbursements received for “out-of-pocket” expenses be characterized as revenue. The year ended December 31, 2001 has been adjusted for this adoption. Operating expenses include cost of services and selling, general and administrative expenses.	
(b)	In January 2002, our company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” or “SFAS 142,” which requires that goodwill no longer be amortized effective January 1, 2002. Prior to our adoption of SFAS 142, goodwill was amortized on a straight-line basis over estimated useful lives ranging from 10 to 40 years.	
(c)	In 2002, our company recorded expenses of $41.0 million related to the settlement of certain class action litigation and regulatory matters.	
(d)	We adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” or “SFAS 123R,” following the modified prospective method effective January 1, 2006. SFAS 123R requires all stock-based payments to employees to be recognized in the income statement based on their respective grant date fair values over the corresponding service periods and also requires an estimation of forfeitures when calculating compensation expense. Stock-based compensation expense, including the impact of adopting SFAS 123R, was $6.1 million for the six months ended June 30, 2006.	
(e)	Primarily includes derivative gains and losses, the net foreign exchange effect on notes receivable from affiliates and related foreign currency swaps with First Data, and net interest income due from affiliates. We anticipate volatility with respect to derivative gains and losses until we have redesignated our foreign currency forward contracts by modifying all hedge documentation to allow for cash flow hedge accounting with respect to these and future foreign currency forward positions. We also anticipate volatility with respect to the revaluation of our euro denominated notes receivable from affiliates and related foreign currency swap agreements with First Data until we have settled our notes receivable from affiliates and related foreign currency swap agreements as part of the spin-off. During the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005, 2004 and 2003, the pre-tax derivative gain (loss) was $(27.2) million, $36.8 million, $45.8 million, $(30.2) million, and $(37.9) million, respectively. During the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005 and 2004, the pre-tax gain (loss) on foreign exchange translation of notes receivable from affiliates and valuation of related foreign currency swap agreements was $(4.1) million, $(9.8) million, $(5.9) million, and $7.5 million, respectively. There was no gain or loss during 2003.	
(f)	Consumer-to-consumer transactions include consumer-to-consumer money transfer services worldwide. Amounts include Vigo Remittance Corp. transactions since the acquisition date of October 21, 2005.	
(g)	Consumer-to-business transactions include Quick Collect, Convenience Pay, Speedpay and Equity Accelerator transactions processed by us. Amounts include E Commerce Group, Inc. (Speedpay) transactions since its acquisition in June 2002 and Paymap Inc. (Equity Accelerator and Just-in-Time) transactions since its acquisition in April 2002.	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
You should read the following discussion in conjunction with the combined financial statements and the notes to those statements included elsewhere in this information statement. Certain statements contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this information statement. See “Risk Factors” and “Forward-looking Statements.”
 
Overview
 
We are a leading provider of money transfer services, operating in two business segments. We provide consumer-to-consumer money transfer services, primarily through a global network of third-party agents using our multi-currency, real-time money transfer processing systems. In most countries, this service is available for both intra-country transfers—that is, money transfers from one location to another in the same country—and internationally—that is, the transfer of funds into or out of a country. We also provide consumer-to-business payment services, which allow consumers to send funds to businesses, government agencies and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers and other financial service providers (all sometimes referred to as “billers”) through our network of third-party agents and various electronic channels. Consumer-to-business payment services are generally available only inside a particular country, although in some instances we provide the ability for consumers to make payments from one country to another. Businesses not considered part of the segments described above are categorized as “Other” and generated approximately 3% of our total combined revenue for the year ended December 31, 2005.
 
The consumer-to-consumer money transfer service is available through an extensive network of agent locations that offer Western Union services around the world. Some of our agent locations only pay and do not send money. In addition to our agent locations, we are expanding the ability of consumers to send money through other channels, such as our Internet site, westernunion.com, and the telephone. Consumer-to-consumer money transfer service is available through the Western Union ® , Orlandi Valuta ® and Vigo SM brands, and includes locations offering any of our three brands.
 
The consumer-to-business service allows consumers to transfer money to a biller. This service is available at many of our Western Union agent locations, and in some instances through the Internet or by telephone. In 2005, substantially all of our consumer-to-business segment revenue was generated from transactions in the United States.
 
Factors that we believe are important to our long-term success include increasing international growth by expanding and diversifying our consumer-to-consumer global distribution network, building our brands, enhancing the consumer experience, expanding the channels by which consumers can send or receive money and diversifying our consumer-to-consumer service offerings, expanding into new biller and other business and government relationships, and expanding the international presence of our consumer-to-business offerings. Significant factors affecting our financial position and results of operations include:
 
 	•	 	Transaction volume is the primary generator of revenue in our businesses. Transaction volume in our consumer-to-consumer segment is affected by, among other things, the size of the international migrant population and individual needs to transfer funds in emergency situations. We anticipate the demand for money transfer services will be strong as individuals continue to migrate to countries outside of their countries of origin. As noted elsewhere in this information statement, a reduction in the size of the migrant population, interruptions in migration patterns or reduced employment opportunities including	
 
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 	those resulting from any changes in immigration laws, economic development patterns or political events, could adversely affect our transaction volume. For example, in the three months ended June 30, 2006, transaction growth in our consumer-to-consumer business, primarily the United States to Mexico and Latin American corridors, and to a lesser extent the domestic money transfer business, was adversely impacted by what we believe is uncertainty created by immigration reform activities in the United States. Since the end of the second quarter, we have seen this trend continue, and as uncertainty about immigration reform persists, we anticipate our businesses will continue to be similarly impacted for some period of time.	
 
 	•	 	Revenue is also impacted by prices charged to the consumer, the amount of money sent, and by changes in the exchange rate between foreign currencies, particularly the euro, and the United States dollar. We have made periodic pricing decreases in response to competition and to implement our brand investment strategy, which includes better meeting consumer needs, maximizing market opportunities and strengthening our overall competitive positioning. Net price decreases have been approximately 3% of our annual combined revenues in each of the last two years, a trend that is expected to continue.	
 
 	•	 	We continue to face robust competition in both our consumer-to-consumer and consumer-to-business segments from a variety of money transfer and consumer payment providers. We believe the most significant competitive factors in the consumer-to-consumer segment relate to brand recognition, distribution network, consumer experience and price and in the consumer-to-business segment relate to brand recognition, convenience, variety of payment methods and price.	
 
 	•	 	Regulation of the money transfer industry is increasing. The number and complexity of regulations around the world and the pace at which regulation is changing are factors that pose significant challenges to our business. We continue to implement policies and programs and adapt our business practices and strategies to help us comply with current legal requirements, as well as with new and changing legal requirements affecting particular services, or the conduct of our business in general. Our activities include dedicated compliance personnel, training and monitoring programs, government relations and regulatory outreach efforts and support and guidance to the agent network on compliance programs. These efforts increase our costs of doing business.	
 
 	•	 	We have historically intended to use derivative instruments to mitigate changes in foreign currency exchange rates. We had intended to apply hedge accounting to these derivatives, which produced financial statement results that appeared to be consistent with the economics of these transactions. However, we have determined that our hedge documentation was not adequate at the inception of the derivative agreements to qualify for hedge accounting. As a result, changes in the fair market value of our outstanding derivative instruments, which are impacted primarily by fluctuations in the euro, are now recognized in our combined statements of income. Previously, changes to the fair value of our derivative instruments were recognized on our combined balance sheets and did not directly impact our net income until such instruments matured. This change has resulted in volatility in our net income for the periods presented. For example, during the six months ended June 30, 2006, we had pre-tax derivative losses of $27.2 million, and for the six months ended June 30, 2005 we had pre-tax derivative gains of $36.8 million. In addition, during the year ended December 31, 2005, we had pre-tax derivative gains of $45.8 million, and we had pre-tax derivative losses of $30.2 million and $37.9 million during the years ended December 31, 2004 and 2003, respectively. We anticipate our results will be subject to volatility as a result of this change until we are able to redesignate the affected forward contracts as hedges with revised documentation to allow for hedge accounting treatment, which we intend to do as expeditiously as possible. We also intend to have the appropriate documentation required for future foreign currency forward positions to qualify for hedge accounting treatment.	
 
 	•	 	Our consumer-to-business segment continues to experience a shift in demand from cash-based walk-in payment services to lower margin, higher volume electronic payment services.	
 
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Financial Statement Restatement
 
On August 22, 2006, we concluded that certain of our foreign exchange forward contracts did not qualify for cash flow hedge accounting. Consequently, we have restated our historical combined financial statements and financial information.
 
We believed our initial accounting treatment for our foreign currency derivative instruments properly reflected the intent and economics of the underlying transactions; however, the interpretations of how to apply SFAS No. 133 and how to adequately provide documentation for such instruments so as to qualify for hedge accounting are very complex. Based upon an evaluation of our initial hedge documentation, we concluded that certain of our foreign exchange forward contracts did not qualify for cash flow hedge accounting since the initial documentation with respect to these instruments did not meet the technical requirements of SFAS No. 133. Therefore, any changes in the market value of these derivative instruments prior to their maturity should have been recorded through the combined statements of income rather than in combined other comprehensive income (loss), a component of net investment in The Western Union Company. We have also restated the combined financial statements and financial information to reflect foreign currency translation adjustments of certain notes receivable from affiliates denominated in euros and changes in the market value of certain foreign currency swap agreements with affiliates in the combined statements of income. These notes receivable with affiliates and foreign currency swap agreements with First Data will be settled in connection with the spin-off.
 
A summary of the changes resulting from the restatement is as follows:

 	  	Years Ended December 31,	 	
 	  	  2005  	 	 	  2004  	 	 	  2003  	 	
(in millions)	  	 	 	 	 	 	 	 	 	
Combined Statements of Income:	  			 			 			
Revenues	  	0.5	 	 	23.2	 	 	30.8	 	
Operating income	  	0.5	 	 	23.2	 	 	30.8	 	
Derivative gains/(losses), net	  	45.8	 	 	(30.2	)	 	(37.9	)	
Foreign exchange effect on notes receivable from affiliates, net	  	(5.9	)	 	7.5	 	 	—  	 	
Provision for income taxes	  	11.2	 	 	1.0	 	 	(2.1	)	
Net income	  	29.2	 	 	(0.5	)	 	(5.0	)	
				
Combined Statements of Cash Flows:	  			 			 			
Net cash provided by operating activities	  	0.5	 	 	23.2	 	 	30.8	 	
Net cash used in investing activities	  	(0.5	)	 	(23.2	)	 	(30.8	)	
			
 	  	As of
December 31,	 	 	 	 	
 	  	2005	 	 	2004	 	 	 	 	
Combined Balance Sheets:	  			 			 			
Receivables from affiliated companies, net	  	7.1	 	 	—  	 	 			
Notes receivable from affiliated companies	  	10.2	 	 	23.2	 	 			
Total assets	  	17.3	 	 	23.2	 	 			
Deferred tax liability, net	  	3.2	 	 	(2.5	)	 			
Total liabilities	  	3.2	 	 	(2.5	)	 			
Net investment in The Western Union Company	  	29.4	 	 	0.2	 	 			
Accumulated other comprehensive loss	  	(15.3	)	 	25.5	 	 			
Total net investment in The Western Union Company	  	14.1	 	 	25.7	 	 			
Total liabilities and net investment in The Western Union Company	  	17.3	 	 	23.2	 	 			
 
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Significant Financial and Other Highlights
 
Significant financial and other highlights for the year ended December 31, 2005 and the six months ended June 30, 2006 include:
 
 	•	 	For the year ended December 31, 2005, we generated $3,987.9 million in total combined revenues and $927.4 million in combined net income. This resulted in year-over-year growth of 12% in total combined revenues and 23% in combined net income.	
 
 	•	 	For the six months ended June 30, 2006, we generated $2,156.6 million in total combined revenues and $438.7 million in combined net income.	
 
 	•	 	For the year ended December 31, 2005, we completed 119 million consumer-to-consumer transactions worldwide, an increase of 23% over 2004. Consumer-to-consumer transactions grew 29% in the six months ended June 30, 2006 compared to the same period in 2005. Excluding transactions attributable to Vigo Remittance Corporation, or “Vigo,” consumer-to-consumer transactions increased 21% in 2005 compared to 2004 and 20% for the six months ended June 30, 2006 compared to the same period in 2005.	
 
 	•	 	Consumer-to-business transactions increased 12% from 2004 to 2005 to 215 million transactions, and increased 18% to 121 million transactions in the six months ended June 30, 2006 over the corresponding period in 2005.	
 
In October 2005, First Data acquired Vigo, a provider of consumer-to-consumer money transfer services primarily from the United States to Latin America, which First Data will contribute to Western Union as part of the spin-off.
 
Adoption of SFAS 123R
 
We adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” or “SFAS 123R,” following the modified prospective method effective January 1, 2006. SFAS 123R requires all stock-based payments to employees to be recognized in the income statement based on their respective grant date fair values over the corresponding service periods and also requires an estimation of forfeitures when calculating compensation expense. Stock-based compensation expense, including the impact of adopting SFAS 123R, was $6.1 million for the six months ended June 30, 2006.
 
In December 2005, First Data accelerated vesting of all outstanding unvested stock options granted to its officers and employees under its 2002 Long-Term Incentive Plan. The decision to accelerate the vesting of these stock options was made primarily to reduce stock-based compensation expense that otherwise likely would have been recorded in future periods following First Data’s adoption of SFAS 123R. We recognized compensation expense of $1.8 million during the fourth quarter of 2005 related to accelerated vesting.
 
Refer to Note 15—“Stock Compensation Plans” of our historical combined financial statements for a more detailed discussion of First Data’s stock-based compensation plans and the adoption of SFAS 123R.
 
The Separation of Western Union from First Data
 
On January 26, 2006, First Data announced its intention to separate its money transfer and consumer payments businesses into an independent, publicly traded company through a spin-off of 100% of our stock to First Data stockholders. The spin-off is intended to be tax-free to First Data’s stockholders and to First Data and Western Union. Completion of the spin-off is expected in the late third or early fourth quarter of 2006, subject to certain conditions, including necessary regulatory approvals, receipt of the private letter ruling requested from the Internal Revenue Service, a favorable tax opinion of outside tax counsel and final approval from First Data’s board of directors to complete the spin-off.
 
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Basis of Presentation
 
The combined financial statements are comprised of entities included in First Data’s consolidated financial statements and accounting records, principally representing the consumer-to-consumer money transfer and consumer-to-business payment services businesses, and reflect the historical results of operations and the historical basis of assets and liabilities as if such businesses had been combined for all periods presented. All significant intercompany transactions and accounts have been eliminated. The combined statements of income include expense allocations for certain corporate functions historically provided to Western Union by First Data, including treasury, tax, accounting and reporting, mergers and acquisitions, risk management, legal, internal audit, procurement, human resources, investor relations and information technology. If possible, these allocations were made on a specific identification basis. Otherwise, the expenses related to services provided to Western Union by First Data were allocated to Western Union based on the relative percentages, as compared to First Data’s other businesses, of headcount or other appropriate methods depending on the nature of each item of cost to be allocated. Pursuant to a transition services agreement we will enter into with First Data prior to the spin-off, First Data will continue to provide Western Union with certain of these services at prices agreed upon by First Data and Western Union for a period of up to one year from the date of the spin-off. Western Union will arrange to procure other services pursuant to arrangements with third parties. See “Our Relationship with First Data After the Spin-Off” for a description of the transition services agreement. The costs historically allocated to us by First Data for the services it has provided us may not be indicative of the costs we will incur to obtain these services following the spin-off. In addition to the transition services agreement, we will enter into a number of commercial agreements with First Data in connection with the spin-off, many of which are expected to have terms longer than a year. See “Our Relationship with First Data After the Spin-Off—Other Spin-Off Agreements.”
 
Our businesses have used a number of First Data corporate functions as described above to support our business functions. Following completion of the spin-off, we will no longer use those functions (other than those provided under the transition services agreement) and will need to establish our own. We expect to incur initial costs in 2006 to establish the necessary corporate infrastructure.
 
We expect that certain expenses related to being a stand-alone company will be higher in the future than the historical amounts reflected in the combined statements of income. The financial information presented in this document does not reflect what our consolidated financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented and is not necessarily indicative of our future consolidated financial position, results of operations or cash flows.
 
We also have prepared unaudited pro forma combined financial statements to make adjustments for and give effect to the spin-off. See “Unaudited Pro Forma Combined Financial Statements.”
 
New Financing
 
We expect that in connection with the spin-off, we will transfer to First Data approximately $3.6 billion in the form of a combination of cash and our debt securities, which will include a dividend paid to First Data in the form of a promissory note from our subsidiary, FFMC, in an aggregate principal amount of approximately $[•] billion, the issuance by The Western Union Company to First Data of at least $800 million in exchange notes and a cash payment by Western Union to First Data of approximately $[•] million, which will be financed. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.
 
We expect that FFMC will repay the promissory note on the distribution date or shortly thereafter with borrowings under a 364 day bridge loan facility it will enter into on or shortly after the distribution date. The Western Union Company is considering and, subject to market conditions following the spin-off, expects to
 
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refinance the amounts borrowed by FFMC under the bridge loan with proceeds from debt The Western Union Company will issue or amounts The Western Union Company will otherwise borrow following the distribution date. However, we do not have any arrangements with any financial institution or other third parties with respect to such debt and there can be no assurance that The Western Union Company will be able to refinance the borrowings under the FFMC bridge loan.
 
We also expect to enter into a credit facility with certain financial institutions on the distribution date that will be used for general corporate purposes. We do not expect to incur any borrowings under the credit facility in connection with the spin-off.
 
While we expect to incur significant amounts of debt in connection with the spin-off, our significant revenue and cash flow will provide us with opportunities to invest in our core business, new services and in new markets.
 
Components of Revenue and Expenses
 
The following briefly describes the components of revenue and expenses as presented in the combined statements of income. Descriptions of our revenue recognition policies are included in Note 2—“Summary of Significant Accounting Policies” of our historical combined financial statements.
 
Transaction fees —Transaction fees are charged to consumers for sending money transfers and consumer-to-business payments. Consumer-to-consumer transaction fees generally vary according to the principal amount of the money transfer and the locations from and to which the funds are sent. Transaction fees represented 84% and 83% of Western Union’s combined revenues for the year ended December 31, 2005 and for the six months ended June 30, 2006, respectively, and are most reflective of our performance. 
 
Foreign exchange revenue —In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency. Foreign exchange revenue growth has historically been driven principally by growth in cross-currency transactions rather than changes to the foreign exchange spread. Foreign exchange revenue represented 13% of Western Union’s total combined revenues for the year ended December 31, 2005 and 14% for the six months ended June 30, 2006.
 
Commission and other revenues —Commission and other revenues represented approximately 3% of our total combined revenue for both the year ended December 31, 2005 and for the six months ended June 30, 2006. Commission and other revenues consist of commissions we receive in connection with the sale of money orders, enrollment fees received when consumers enroll in the Equity Accelerator program (a recurring mortgage payment service program), revenue recorded for reimbursable costs incurred to operate payment services programs and investment income primarily derived from interest generated on money transfer settlement assets as well as realized net gains and losses from such assets.
 
Cost of services —Cost of services includes the costs directly associated with providing services to consumers, including commissions paid to agents and billers, personnel expenses, software maintenance costs, equipment, telecommunications costs, bank fees, infrastructure costs to provide the resources and materials necessary to offer money transfer and other payment services (including reimbursable costs), depreciation and amortization expense, and other operating expenses.
 
Selling, general and administrative —Selling, general and administrative, or “SG&A,” primarily consists of salaries, wages and related expenses paid to sales and administrative personnel, as well as advertising and promotional costs and other selling and administrative expenses. SG&A also includes allocations of general corporate overhead costs from First Data.
 
Derivative (losses)/gains, net —Derivative gains and losses include realized and unrealized gains and losses associated with certain foreign currency forward contracts that did not qualify as hedges under derivative
 
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accounting rules during the periods presented and do not mitigate exposures related to settlement assets and settlement obligations. Fluctuations in foreign currency forward contracts that mitigate exposures related to the settlement activities of our money transfer business, along with the gains and losses on the revaluation of the related settlement assets and obligations, are recorded to operating expenses.
 
Foreign exchange effect on notes receivable from affiliates , net —Certain of the notes receivable from affiliates in our combined balance sheets are repayable in euros, and certain of those euro denominated notes also have foreign currency swap agreements associated with them. These notes receivable are translated based on current exchange rates between the euro and the United States dollar, and changes in fair value of the related foreign currency swap agreements are recorded based on current market valuations. The effect of translation adjustments and recording the foreign currency swaps to market is reflected in our combined statements of income as foreign exchange effect on notes receivable from affiliates.
 
Interest income from affiliates, net —Interest income from affiliates, net consists of interest income earned on notes receivable from affiliates of First Data net of interest expense incurred on notes payable to affiliates of First Data. In connection with the spin-off, all notes receivable and payable are expected to be settled.
 
Results of Operations
 
The following discussion for both combined results of operations and segment results refers to the six months ended June 30, 2006 compared to the same period in 2005, the year ended December 31, 2005 compared to the same period in 2004, and the year ended December 31, 2004 compared to the same period in 2003. Combined results of operations should be read in conjunction with segment results of operations, which provide more detailed discussions concerning certain components of the combined statements of income. All significant intercompany accounts and transactions have been eliminated.
 
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The following table sets forth our combined results of operations for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

 	 	Six Months
Ended
June 30,	 	 	% Change	 	 	Years Ended December 31,	 	 	% Change	 	
 	 	2006	 	 	2005	 	 	YTD 2006
vs. YTD 2005	 	 	2005	 	 	2004	 	 	2003	 	 	2005
vs. 2004	 	 	2004
vs. 2003	 	
 	 	 	 	 	(restated)	 	 	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	 	 	 	 	 	
 	 	(unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(in millions)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 				 				 			 				 				 				 			 			
Transaction fees	 	$	1,791.6	 	 	$	1,604.2	 	 	12	%	 	$	3,354.8	 	 	$	3,006.1	 	 	$	2,679.0	 	 	12	%	 	12	%	
Foreign exchange revenue	 	 	309.6	 	 	 	248.6	 	 	25	%	 	 	531.0	 	 	 	449.6	 	 	 	380.9	 	 	18	%	 	18	%	
Commission and other revenues	 	 	55.4	 	 	 	47.6	 	 	16	%	 	 	102.1	 	 	 	91.9	 	 	 	91.7	 	 	11	%	 	—	 	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	 	 	2,156.6	 	 	 	1,900.4	 	 	13	%	 	 	3,987.9	 	 	 	3,547.6	 	 	 	3,151.6	 	 	12	%	 	13	%	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Expenses:	 				 				 			 				 				 				 			 			
Cost of services	 	 	1,153.4	 	 	 	995.3	 	 	16	%	 	 	2,118.9	 	 	 	1,859.4	 	 	 	1,618.6	 	 	14	%	 	15	%	
Selling, general and administrative	 	 	364.1	 	 	 	292.5	 	 	24	%	 	 	599.8	 	 	 	576.1	 	 	 	530.0	 	 	4	%	 	9	%	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total expenses	 	 	1,517.5	 	 	 	1,287.8	 	 	18	%	 	 	2,718.7	 	 	 	2,435.5	 	 	 	2,148.6	 	 	12	%	 	13	%	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	 	 	639.1	 	 	 	612.6	 	 	4	%	 	 	1,269.2	 	 	 	1,112.1	 	 	 	1,003.0	 	 	14	%	 	11	%	
Derivative (losses)/gains, net	 	 	(27.2	)	 	 	36.8	 	 	*	 	 	 	45.8	 	 	 	(30.2	)	 	 	(37.9	)	 	*	 	 	20	%	
Foreign exchange effect on notes receivable from affiliates, net	 	 	(4.1	)	 	 	(9.8	)	 	*	 	 	 	(5.9	)	 	 	7.5	 	 	 	—  	 	 	*	 	 	*	 	
Interest income from affiliates, net	 	 	23.5	 	 	 	9.2	 	 	*	 	 	 	24.3	 	 	 	9.1	 	 	 	—  	 	 	*	 	 	*	 	
Other income (expense), net	 	 	17.4	 	 	 	5.8	 	 	*	 	 	 	10.7	 	 	 	0.1	 	 	 	(2.5	)	 	*	 	 	*	 	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Income before income taxes	 	 	648.7	 	 	 	654.6	 	 	(1	)%	 	 	1,344.1	 	 	 	1,098.6	 	 	 	962.6	 	 	22	%	 	14	%	
Provision for income taxes	 	 	210.0	 	 	 	203.0	 	 	3	%	 	 	416.7	 	 	 	347.0	 	 	 	328.9	 	 	20	%	 	6	%	
	 	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Net income	 	$	438.7	 	 	$	451.6	 	 	(3	)%	 	$	927.4	 	 	$	751.6	 	 	$	633.7	 	 	23	%	 	19	%	

*	Calculation not meaningful	
 
Revenues overview
 
The following provides highlights of revenue growth while a more detailed discussion is included in “Segment Discussion”:
 
Transaction fees and foreign exchange revenue
 
The majority of transaction fees and foreign exchange revenue are contributed from our consumer-to-consumer segment, which is discussed in greater detail in “Segment Discussion.” Transaction fee and foreign exchange revenue grew 13% in the six months ended June 30, 2006 due to increased money transfers at existing agent locations and, to a lesser extent, new agent locations. Our acquisition of Vigo in October 2005 contributed
 
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$68.4 million in transaction fee and foreign exchange revenue to the six months ended June 30, 2006 compared to no revenue for the first half of 2005. In addition, for the six months ended June 30, 2006, the exchange rates between the euro and the United States dollar resulted in a reduction to revenue of $20.5 million dollars, compared to a benefit to revenue of $20.3 million for the same period in 2005, assuming a constant exchange ratio between the euro and the United States dollar (i.e., as if there was no change in exchange rates from the same periods in the previous year). On a euro adjusted basis, and excluding Vigo, fee and foreign exchange revenue increased 11% for the six months ended June 30, 2006 and June 30, 2005. On a euro-adjusted basis and excluding Vigo, fee revenue grew 9% in the six months ended June 30, 2006 and foreign exchange revenue grew 21% over the prior year period. In the second quarter of 2006, Western Union’s business was adversely impacted by what we believe is uncertainty created by immigration reform activities in the United States.
 
Transaction fee and foreign exchange revenue increased 12% and 13%, respectively for the years ended December 31, 2005 and 2004. Increased money transfers at existing agent locations and, to a lesser extent, new agent locations contributed to increased consumer-to-consumer transaction volume and fee revenue for the years ended December 31, 2005 and 2004. Vigo contributed $24.2 million of revenue in 2005. Exchange rates between the euro and United States dollar resulted in a negative year over year impact of $1.4 million dollars for the year ended December 31, 2005 compared to a benefit of $73.4 million in 2004. On a euro adjusted basis and excluding Vigo, transaction fee and foreign exchange revenue increased 12% and 11%, respectively for the years ended December 31, 2005 and 2004. On a euro-adjusted basis and excluding Vigo, fee revenue growth improved from 10% for 2004 over 2003 to 11% in 2005 over 2004 and foreign exchange revenue growth was 13% and 17% in 2004 and 2005, respectively. Consumer-to-business transaction fees increased for the year ended December 31, 2005 compared to 2004 due to increased consumer-to-business payment transactions. For the year ended December 31, 2004 consumer-to-business transaction fees were impacted by a decline in cash-based consumer-to-business payments.
 
Foreign exchange revenue increased for the six months ended June 30, 2006 and the years ended December 31, 2005 and 2004 over each respective previous period due to an increase in cross-currency transactions primarily as a result of strong growth in international consumer-to-consumer transactions and the acquisition of Vigo. Foreign exchange revenue growth generally corresponds to international revenue growth from cross-border transactions, which increased 21% in the first six months of 2006, 23% in 2005 and 22% in 2004, excluding Vigo.
 
Transaction fees and foreign exchange revenue for the six months ended June 30, 2006 were impacted by the seasonal nature of the consumer-to-consumer segment. Consumer-to-consumer segment revenue typically increases sequentially from the first quarter to the fourth quarter each year and declines from the fourth quarter to the first quarter of the following year. This seasonal fluctuation is related to the holiday season in the United States and other countries during the fourth quarter. This trend occurred in 2004 and 2005 and is expected to continue.
 
Commission and other revenues
 
During the six months ended June 30, 2006, commission and other revenues increased as a result of increased money order commissions due to higher investment balances and increased enrollment fees from our Equity Accelerator program.
 
The increase in commission and other revenues for the year ended December 31, 2005 compared to the year ended December 31, 2004 was driven primarily by an increase in money order commissions due to higher investment balances in the money order investment portfolio and more consumers participating in the Equity Accelerator program. Commission and other revenues in 2004 remained consistent with 2003 as increases in money order commissions were offset by lower investment income on money transfer settlement assets and lower enrollment fees from the Equity Accelerator program.
 
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Expenses overview
 
The following provides highlights of expenses:
 
Cost of services
 
Cost of services as a percentage of revenue was 53% and 52% for the six months ended June 30, 2006 and 2005, respectively, and 53%, 52% and 51% the years ended December 31, 2005, 2004 and 2003, respectively.
 
The majority of the increase in cost of services in the six months ended June 30, 2006 compared to the same period in 2005 was attributable to an increase in agent commissions corresponding to revenue growth as well as the October 2005 acquisition of Vigo.
 
The majority of the increase in cost of services for the year ended December 31, 2005 compared to 2004 and 2004 compared to 2003 was attributable to an increase in agent commissions corresponding to the increase in revenue. In addition, an $8.7 million impairment charge was recorded in 2005 due to a change in strategic direction related to Eposs Limited, or “Eposs,” a United Kingdom-based seller of cellular prepaid services. We sold our majority interest in Eposs on April 28, 2006. We also recognized an $8.2 million charge in the fourth quarter of 2005 related to an additional accrual of domestic and international escheatment liabilities as further discussed in Note 12—“Commitments and Contingencies” to our combined financial statements.
 
The year ended December 31, 2005 included lower employee incentive compensation expense compared to 2004 primarily as a result of certain internal performance targets for First Data not being achieved in 2005 whereas all targeted discretionary incentive compensation was paid in 2004. Based on the internal performance targets that have been established in 2006, and the related performance so far, we anticipate recording higher employee incentive compensation accruals in 2006 compared to 2005 when such accruals were lower in anticipation that certain 2005 internal performance targets would not be achieved. If recorded, these accruals in 2006 will negatively impact our results of operations.
 
The increase in cost of services for the year ended December 31, 2004 compared to 2003 was driven by a similar increase in agent commissions as a result of increased revenues as noted above.
 
Selling, general and administrative
 
In line with our strategic objective of building the Western Union brand, marketing related expenditures increased during the six months ended June 30, 2006 over the comparable period in 2005 and were approximately 7% of combined revenue. Contributing to the growth in SG&A for the first half of 2006 were the October 2005 acquisition of Vigo, the accrual of additional expenses related to a consent agreement with the Arizona Department of Financial Institutions, and increased corporate overhead allocations from First Data, including allocated stock compensation in connection with the adoption of SFAS 123R.
 
SG&A expenses increased for the years ended December 31, 2005 and 2004 due to an increase in marketing related expenses over that in the prior years. In each of the last three years, we spent approximately 7% of our combined revenue on marketing, including advertising, events, loyalty programs and employees dedicated to marketing activities.
 
The year ended December 31, 2005 included lower employee incentive compensation expense compared to 2004 primarily as a result of certain internal performance targets for First Data not being achieved in 2005 whereas all targeted discretionary incentive compensation was paid in 2004. Based on the internal performance targets that have been established in 2006, and the related performance so far, we anticipate recording higher employee incentive compensation accruals in 2006 compared to 2005 when such accruals were lower in anticipation that certain 2005 internal performance targets would not be achieved. If recorded, these accruals in 2006 will negatively impact our results of operations.
 
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SG&A expenses increased for the year ended December 31, 2004 compared to December 31, 2003 due to increased marketing related expenses, increased corporate overhead allocations from First Data and increased employee incentive compensation.
 
Derivative (losses)/gains, net
 
Our foreign currency forward contracts that are not held to mitigate foreign exchange rate fluctuations in settlement assets and settlement obligations are held primarily in four currencies, the euro, British pound, Canadian dollar and Swiss franc, and typically have a maturity of one year. Gains and losses are recognized as a result of variations between foreign currency market exchange rates and the forward contract rates. Our euro denominated forward contracts represented approximately 79%, 88% and 87% of the total unrealized gains and losses on these foreign currency forwards as of June 30, 2006 and December 31, 2005 and 2004, respectively. Notional amounts of our euro denominated currency forwards as of June 30, 2006 and December 31, 2005 and 2004 were 261.5 million, 243.0 million and 219.7 million euro, respectively. We anticipate our results will be subject to volatility until we are able to redesignate the affected forward contracts as hedges with revised documentation to allow for hedge accounting treatment, which we intend to do as expeditiously as possible. We also intend to have the appropriate documentation required for future foreign currency forward positions to qualify for hedge accounting treatment.
 
Foreign exchange effect on notes receivable from affiliates, net
 
The revaluation to fair market value of notes receivable from affiliates and the related foreign currency swap arrangements that are denominated in euro benefited income before income taxes in the six months ended June 30, 2006 compared to 2005 by $5.7 million. For the years ended 2005 compared to 2004 and 2004 compared to 2003, these mark-to-market valuations resulted in decreased income before income taxes of $13.4 million and increased income before income taxes of $7.5 million, respectively. Such, fluctuations typically correspond to changes in the value of the euro. The fair market value of all notes receivable from affiliates and related foreign currency swap agreements will be settled in cash in connection with the spin-off.
 
Interest income from affiliates, net
 
Interest income from affiliates increased for all periods presented due to increased net affiliate borrowings.
 
Income taxes
 
Our effective tax rates on pretax income were 32.4% and 31.0% for the six months ended June 30, 2006 and 2005, respectively, and 31.0%, 31.6% and 34.2% for the years ended December 31, 2005, 2004 and 2003, respectively. The increase in the effective tax rate in the six months ended June 30, 2006 over the comparable period in 2005 is attributable to certain state tax adjustments that benefited the tax provision in 2005 and the impact of certain non-deductible 2006 foreign exchange losses related to currency swap agreements with First Data. The effective tax rate in 2005 compared to 2004 remained relatively constant but benefited slightly from the state tax adjustments previously noted. The decrease in the effective tax rate in 2004 compared to 2003 resulted from the legal restructuring of our international operations in 2003 only being in place during the latter half of 2003 versus the full year in 2004, resulting in higher foreign income taxed at lower rates for 2004 compared to 2003.
 
To address certain tax aspects of a 2003 legal restructuring of our company’s international operations, First Data initiated discussions with the Internal Revenue Service pursuant to the Internal Revenue Service’s Advanced Pricing Agreement, or “APA,” Program. If an APA is negotiated successfully, during its term, our company generally will avoid further examination of the transfer pricing methods applicable to, and valuations of, the covered transactions. We continue to negotiate with the Internal Revenue Service in the APA process, and while we hope to reach a resolution through the process, there can be no assurances that the APA negotiations will be resolved in a manner acceptable to us. If not so resolved, the matter likely would proceed to other forums
 
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within the Internal Revenue Service. We have established contingency reserves for material, known tax exposures, including the potential for tax audit adjustments with respect to taxes associated with our foreign business that is the subject of the 2003 legal restructuring and the Internal Revenue Service’s APA Program discussions referenced above. These tax reserves reflect what we believe to be reasonable assumptions as to the likely resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. Regarding the 2003 legal restructuring, we have benefited by having our income from certain foreign-to-foreign money transfer transactions taxed at relatively low foreign tax rates rather than the United States statutory tax rate. The amount of taxes attributable to such rate differential is included in the “Foreign rate differential” line in the effective rate reconciliation in Note 9—“Income Taxes” to our historical combined financial statements and cumulatively totaled $131.6 million through December 31, 2005. Any differences from our company’s positions as recorded in its financial statements upon resolution of these issues will be reflected as a part of income tax expense in the period during which the issues are resolved. Such resolution could also affect our effective tax rate in future periods.
 
Segment Discussion
 
We manage our business around the consumers we serve and the types of services we offer. Each segment addresses a different combination of consumer groups, distribution networks, and services offered. Our segments are:
 
 	•	 	Consumer-to-consumer—provides money transfer services between consumers, primarily through a global network of third-party agents using our multi-currency, real-time money transfer processing systems.	
 
 	•	 	Consumer-to-business—focuses on payments from consumers to billers through our networks of third-party agents and various electronic channels. In 2005, substantially all of our consumer-to-business segment revenue was generated from transactions in the United States.	
 
The business segment measurements provided to, and evaluated by, our chief operating decision maker are computed in accordance with the following principles:
 
 	•	 	The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies.	
 
 	•	 	Segment revenue includes intersegment revenue.	
 
 	•	 	Corporate overhead is allocated to the segments based on a percentage of the segments’ revenue.	
 
 	•	 	Costs incurred to effect the spin-off are not allocated to reporting segments.	
 
 	•	 	Exclude all items not included in operating income.	
 
The following table sets forth the different components of segment revenues as a percentage of the combined total for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

  	  	Six Months Ended
June 30,	 	 	Years Ended
December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
Consumer-to-consumer	  	83	%	 	82	%	 	82	%	 	81	%	 	78	%	
Consumer-to-business	  	15	%	 	16	%	 	15	%	 	16	%	 	19	%	
Other	  	2	%	 	2	%	 	3	%	 	3	%	 	3	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	100	%	 	100	%	 	100	%	 	100	%	 	100	%	

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Consumer-to-Consumer Segment
 
The following table sets forth our consumer-to-consumer segment results of operations for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

 	  	Six Months
Ended
June 30,	 	 	% Change	 	 	Years Ended December 31,	 	 	% Change	 	
 	  	2006	 	 	2005	 	 	YTD 2006
vs. YTD 2005	 	 	2005	 	 	2004	 	 	2003	 	 	2005
vs. 2004	 	 	2004
vs. 2003	 	
(in millions)	  	 	 	 	(restated)	 	 	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	 	 	 	 	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	  				 				 			 				 				 				 			 			
Transaction fees	  	$	1,469.4	 	 	$	1,290.0	 	 	14	%	 	$	2,724.0	 	 	$	2,390.9	 	 	$	2,050.8	 	 	14	%	 	17	%	
Foreign exchange revenue	  	 	308.9	 	 	 	248.0	 	 	25	%	 	 	529.6	 	 	 	448.3	 	 	 	379.7	 	 	18	%	 	18	%	
Other revenues	  	 	15.5	 	 	 	11.3	 	 	37	%	 	 	25.6	 	 	 	22.5	 	 	 	23.4	 	 	14	%	 	(4	)%	
	  	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	  	$	1,793.8	 	 	$	1,549.3	 	 	16	%	 	$	3,279.2	 	 	$	2,861.7	 	 	$	2,453.9	 	 	15	%	 	17	%	
	  	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	  	$	516.6	 	 	$	495.0	 	 	4	%	 	$	1,047.9	 	 	$	886.5	 	 	$	765.2	 	 	18	%	 	16	%	
Operating margin	  	 	29	%	 	 	32	%	 			 	 	32	%	 	 	31	%	 	 	31	%	 			 			
Key indicators:	  				 				 			 				 				 				 			 			
Consumer-to-consumer transactions (unaudited)	  	 	69.89	 	 	 	54.09	 	 	29	%	 	 	118.52	 	 	 	96.66	 	 	 	81.04	 	 	23	%	 	19	%	
 
Since 2003, international, domestic and Mexico revenue represented approximately 70%, 20% and 10% of our consumer-to-consumer revenue, respectively. The table below sets forth performance indicators for the consumer-to-consumer segment for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

 	  	Six Months Ended
June 30,	 	 	Years Ended
December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
Consumer-to-consumer transaction growth (a)	  			 			 			 			 			
International (c)	  	33	%	 	24	%	 	27	%	 	24	%	 	25	%	
Domestic (d)	  	3	%	 	3	%	 	5	%	 	8	%	 	6	%	
Mexico (e)	  	49	%	 	20	%	 	28	%	 	16	%	 	22	%	
Consumer-to-consumer revenue growth (b)	  			 			 			 			 			
International	  	16	%	 	18	%	 	16	%	 	21	%	 	25	%	
Domestic	  	3	%	 	2	%	 	4	%	 	8	%	 	3	%	
Mexico	  	45	%	 	23	%	 	33	%	 	6	%	 	16	%	

(a)	Transaction growth for the six months ended June 30, 2006, excluding Vigo, was 26% for International, 3% for Domestic and 12% for Mexico. Transaction growth from 2004 to 2005, excluding Vigo, was 26% for International, 5% for Domestic, and 21% for Mexico.	
(b)	Revenue growth for the six months ended June 30, 2006, excluding Vigo, was 13% for International, 2% for Domestic and 15% for Mexico. Revenue growth from 2004 to 2005, excluding Vigo, was 15% for International, 4% for Domestic, and 27% for Mexico.	
(c)	Represents transactions between and within foreign countries (excluding Canada and Mexico), transactions originated in the United States or Canada destined for foreign countries and foreign country transactions destined for the United States or Canada. Excludes all transactions between or within the United States and Canada and all transactions to and from Mexico as reflected in (d) and (e) below.	
(d)	Represents all transactions between and within the United States and Canada.	
(e)	Represents all transactions to and from Mexico.	
 
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Transaction fees and foreign exchange revenue
 
Consumer-to-consumer money transfer revenue growth in the six months ended June 30, 2006 over the same period in 2005 was driven by international revenue growth and the acquisition of Vigo, which was completed in the fourth quarter 2005. Vigo contributed $68.4 million in transaction fee and foreign exchange revenue for the six months ended June 30, 2006. In the three months ended June 30, 2006, transaction growth in our consumer-to-consumer business, primarily the United States to Mexico and Latin American corridors, and to a lesser extent the domestic money transfer business, was adversely impacted by what we believe is uncertainty created by immigration reform activities in the United States. Since the end of the second quarter, we have seen this trend continue, and as uncertainty about immigration reform persists, we anticipate our businesses will continue to be similarly impacted for some period of time.
 
International revenue growth in the six months ended June 30, 2006 compared to the same period in 2005 resulted from money transfer transaction growth and the acquisition of Vigo. International money transfer transaction growth in the six months ended June 30, 2006 compared to the prior year period was driven most significantly by growth in the United States and European outbound businesses. The key inbound markets of India and China continue to grow, with transactions in India doubling for the six month period in 2006 compared to the same period in 2005, and a transaction growth rate for the same period of 40% in China. Growth in international intra-country transactions of 94% for the six months ended June 30, 2006, mostly driven by the Philippines and Chile, also contributed to international transaction growth. These intra-country transactions deliver lower average revenue per transaction than cross-border transactions.
 
For the six months ended June 30, 2006, the exchange rates between the euro and the United States dollar resulted in a reduction to consumer-to-consumer revenue of $20.5 million compared to a benefit to revenue of $20.3 million for the same period in 2005, assuming a constant exchange ratio between the euro and the United States dollar (i.e., as if there was no change in exchange rates from the same periods in the previous year). On a euro-adjusted basis, international revenue grew 18% for the six months ended June 30, 2006, compared to 16% in the comparable period in 2005, with Vigo contributing 3% to the 2006 growth rates.
 
The difference between international transaction growth and revenue growth increased by 11 percentage points in the six months ended June 30, 2006 compared to the same period in 2005, with Vigo accounting for approximately 4 percentage points of the increase. The difference was also impacted by the decline in the exchange rate between the euro and the United States dollar, as noted above and strong growth in lower revenue-per-transaction international intra-country transactions.
 
Growth in Mexico money transfer transactions for the six months ended June 30, 2006 compared to the same period in 2005 was driven by the acquisition of Vigo and growth in Western Union branded transactions, partially offset by a decline in Orlandi Valuta branded transactions, primarily in the second quarter of 2006. Revenues from Western Union branded Mexico transactions grew 20% for the six months ended June 30, 2006, compared to 30% for the same period in 2005. The decline in revenue growth was primarily due to what we believe is uncertainty created by immigration reform activities in the United States. Domestic transaction growth rates, including westernunion.com, in the first six months of 2006 over the same period in 2005 were lower from the growth rates observed for the full year 2005 primarily due to the immigration reform factors discussed above.
 
A key driver of our growth continues to be existing agent locations. Our United States and Canada same-store-sales transaction growth, which includes domestic transactions, transactions destined for Mexico and other countries, and westernunion.com, was 14% for both the six month periods ended June 30, 2006 and 2005. Contributing to the increase in total consumer-to-consumer money transfer revenue and transaction growth was the growth in transactions at existing agent locations, the number of agent locations and marketing campaigns promoting Western Union services. In line with our strategic objective of building the Western Union brand, marketing expenditures increased during the first six months of 2006.
 
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Foreign exchange revenue increased for the six months ended June 30, 2006 due to the acquisition of Vigo and an increase in cross-currency transactions.
 
The majority of transaction growth is derived from more mature agent locations as new agent locations typically contribute only marginally to revenue growth in the first few years of their operation. Increased productivity, measured by transactions per location, often is experienced as locations mature. We believe that new agent locations will help drive growth by increasing the number of locations available to send and receive money. We generally refer to locations with more than 50% of transactions being initiated versus paid out as “send locations” and to the balance of locations as “receive locations.” Send locations are the engine that drives consumer-to-consumer revenue. They contribute more transactions per location than receive locations. However, a wide network of receive locations is necessary to build each corridor and help ensure global distribution. The number of send and receive transactions at an agent location can vary significantly due to such factors as customer demographics around the location, immigration patterns, the location’s class of trade, hours of operation, length of time the location has been offering Western Union services, regulatory limitations and competition. Each of the over 270,000 agent locations in our agent network is capable of providing one or more of our services; however not every location completes a transaction in a given period. For example, as of June 30, 2006, approximately 85% of the combined locations in the United States, Canada and Western Europe experienced money transfer activity in the last 12 months. In the developing regions of Asia and other areas where there are predominantly receive locations, approximately 65% of locations experienced money transfer activity in the last 12 months. We periodically review locations to determine whether they remain enabled to complete money transfer transactions.
 
Consumer-to-consumer revenue growth in 2005 was driven by growth in consumer-to-consumer transactions and the acquisition of Vigo in October 2005. International transaction growth benefited from growth in the United States and European outbound businesses and strong growth in China, India and the Philippines, including the Philippines intra-country business. Consumer-to-consumer revenue growth was also impacted by exchange rates. For the year ended December 31, 2005, the exchange rates between the euro and the United States dollar resulted in a year-over-year negative impact to revenue of $1.4 million compared to benefits of $73.4 million and $109.7 million in 2004 and 2003, respectively, assuming a constant exchange ratio (i.e., as if there were no change in exchange rates from the same period in the previous year) between the euro and the United States dollar. Changes in exchange rates primarily impact international revenue. On a euro-adjusted basis, international revenue growth was 16%, 17% and 17% for the years ended December 31, 2005, 2004 and 2003, respectively. Growth in Mexico transactions for the year ended December 31, 2005 was driven by growth in Western Union branded transactions. The lower transaction and revenue growth rates in domestic money transfer for the year ended December 31, 2005 compared to 2004 are not attributable to any specific event. Domestic transaction growth increased from 3% in the first quarter of 2005 to 6% in the third and fourth quarters of 2005.
 
Consumer-to-consumer revenue growth for the year ended December 31, 2004 was driven by growth in the international business. Growth in international transactions resulted from continued strength in the United States outbound business and the performance of the international business outside the United States. The growth from the maturing of existing locations and new international locations also contributed to sustained growth. International revenue and transaction growth rates in 2004 were negatively impacted, although not significantly, by political events, economic conditions and compliance related activity when compared to 2003. Growth in Mexico transactions in 2004 was 16%. We were able to achieve this growth rate in this highly competitive market by implementing next day service offerings, executing marketing programs and offering payment services at over 7,000 Western Union branded and Orlandi Valuta branded locations in Mexico. Domestic transaction growth in 2004 was driven by increased marketing.
 
The difference between international transaction growth and revenue growth increased in 2005 compared to 2004 primarily as a result of the negative currency conversion impact of the euro compared to the benefit in the prior year as noted above, which negatively impacted revenue growth compared to the prior year. Intra-country business is incremental to both transactions and revenue but benefited transaction growth more than revenue growth. Consumer-to-consumer net pricing decreases, as a percentage of our total revenue, were consistent from 2004 to 2005.
 
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Western Union’s United States and Canada same-store-sales transaction growth which includes domestic transactions and westernunion.com, as well as transactions destined for Mexico and other countries, was 15% in 2005 compared to 2004 and 16% in 2004 compared to 2003.
 
Contributing to the increase in consumer-to-consumer revenue and transaction growth in all periods presented were the maturing of existing agent locations, the increased number of agent locations and targeted marketing campaigns promoting Western Union services.
 
Foreign exchange revenue increased in 2005 compared to 2004 and in 2004 compared to 2003 due to an increase in cross-currency transactions. In addition, growth in 2005 was impacted by the acquisition of Vigo.
 
Operating income
 
The consumer-to-consumer segment’s operating income increased for the six months ended June 30, 2006 compared to the same period in 2005 as a result of the items noted in “Transaction Fees and Foreign Exchange Revenue” above. Operating income growth of 4% was adversely impacted by the October 2005 acquisition of Vigo, the accrual of additional expenses related to a consent agreement with the Arizona Department of Financial Institutions, and increased corporate overhead allocations from First Data, including allocated stock compensation in connection with the adoption of SFAS 123R.
 
Consumer-to-consumer operating income increased for the year ended December 31, 2005 versus 2004 and for the year ended December 31, 2004 compared to 2003 due to the increase in revenue. Also benefiting 2005 operating income was significantly lower employee incentive compensation due to a certain First Data performance measure not being met, which positively impacted operating margins in 2005 compared to 2004. Marketing expenses increased in 2005 and 2004, but remained relatively consistent as a percentage of total revenue.
 
Consumer-to-Business Segment
 
The following table sets forth our consumer-to-business segment results of operations for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

 	  	Six Months Ended
June 30,	 	 	% Change 	 	 	Years Ended December 31,	 	 	% Change	 	
 	  	2006	 	 	2005	 	 	YTD 2006
vs. YTD 2005	 	 	2005	 	 	2004	 	 	2003	 	 	2005
vs. 2004	 	 	2004
vs. 2003	 	
(in millions)	  	 	 	 	(restated)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	  				 				 			 				 				 				 			 			
Transaction fees	  	$	297.7	 	 	$	279.8	 	 	6	%	 	$	565.0	 	 	$	545.4	 	 	$	553.7	 	 	4	%	 	(1	)%	
Other revenues	  	 	18.6	 	 	 	16.5	 	 	13	%	 	 	35.2	 	 	 	30.9	 	 	 	32.4	 	 	14	%	 	(5	)%	
	  	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	  	$	316.3	 	 	$	296.3	 	 	7	%	 	$	600.2	 	 	$	576.3	 	 	$	586.1	 	 	4	%	 	(2	)%	
	  	 	 	 	 	 	 	 	 			 	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	  	$	112.2	 	 	$	112.0	 	 	—	%	 	$	220.4	 	 	$	219.5	 	 	$	230.0	 	 	—	%	 	(5	)%	
Operating margin	  	 	35	%	 	 	38	%	 			 	 	37	%	 	 	38	%	 	 	39	%	 			 			
Key indicators:	  				 				 			 				 				 				 			 			
Consumer-to-business transactions (unaudited)	  	 	120.71	 	 	 	102.30	 	 	18	%	 	 	215.11	 	 	 	192.57	 	 	 	179.39	 	 	12	%	 	7	%	
 
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Transaction fees
 
Strong transaction growth in electronic payments drove transaction fee growth for the six months ended June 30, 2006 versus the same period in 2005, including strong transaction growth of our Speedpay and Equity Accelerator services. The growth rate also benefited, compared to the prior periods, from the Western Union Quick Collect ® cash payments service experiencing a slower rate of decline in the first half of 2006 versus the first half of 2005 resulting from new business. In addition, our Convenience Pay ® business benefited from the addition of a large new biller in the third quarter of 2005 which had a positive impact to transaction and revenue growth rates for the six months ended June 30, 2006 as compared to the same period in 2005.
 
Transaction fee growth for the year ended December 31, 2005 was driven by growth in our electronic payment services as well as the new Convenience Pay biller relationship and the factors related to Western Union Quick Collect discussed above. Transaction fee revenue decreased for the year ended December 31, 2004 compared to 2003 as a result of a decline in the cash payments business due to the shift in demand from cash-based walk-in payment services to electronic payment services.
 
Operating income
 
Operating income for the six months ended June 30, 2006 was consistent with the same period in 2005 despite growth in electronic-based transactions. The shift to electronic-based products from cash-based products, which have higher operating margins than electronic products, negatively impacted operating income in the six month period in 2006. Operating income in the six months ended June 30, 2006 was also impacted by increased corporate overhead allocations from First Data including allocated stock compensation in connection with the adoption of SFAS No.123R.
 
The same factors impacted the operating income increase from 2004 to 2005. The consumer shift from cash-based walk-in payment services to electronic payment services contributed to the decline in operating income from 2003 to 2004. Recent trends in consumer-to-business operating margins are impacted by  the shift from cash-based services to electronic payment services.
 
Other
 
The following table sets forth other results for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005, 2004 and 2003.

 	  	Six Months
Ended
June 30,	  	% Change	 	 	Years Ended December 31,	  	% Change	 	
 	  	2006	  	2005	  	YTD 2006
vs. YTD 2005	 	 	2005	  	2004	  	2003	  	2005
vs. 2004	 	 	2004
vs. 2003	 	
(dollars in millions)	  	(unaudited)	  	 	 	 	 	  	 	  	 	  	 	 	 	 	 	
Revenues	  	$	47.4	  	$	57.5	  	(18	)%	 	$	113.7	  	$	115.6	  	$	113.1	  	(2	)%	 	2	%	
Operating income	  	 	10.3	  	 	5.6	  	*	 	 	 	0.9	  	 	6.1	  	 	7.8	  	*	 	 	*	 	

*	Calculation not meaningful	
 
Revenues
 
Our money order and prepaid services businesses accounted for 70%, 64% and 65% of other revenue in 2005, 2004 and 2003, respectively, and 89% and 67% of other revenue for the six months ended June 30, 2006 and 2005, respectively. These two businesses are the only businesses classified in “Other” with expected recurring revenue. Revenue was driven by the money order business offset by declines in revenue realized by all of the businesses shut down or disposed of described in operating income below.
 
Operating Income
 
For the six months ended June 30, 2006 and 2005, operating income growth was driven by the money order business and the elimination of operating losses of the businesses shut down or disposed of described below.
 
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The decrease in operating income during the year ended December 31, 2005 from the year ended December 31, 2004 was due primarily to a goodwill impairment charge recognized in 2005 of $8.7 million due to a change in strategic direction relating to our majority interest in Eposs. The decrease in operating income during the year ended December 31, 2004 from the year ended December 31, 2003 was due to declines in operating performance of Eposs and our auction payments and messaging businesses. Aggregate operating losses related to these businesses for the years ended December 31, 2005, 2004 and 2003 were $16.2 million, $8.2 million and $1.4 million, respectively.
 
Capital Resources and Liquidity
 
Historically, our source of liquidity was cash generated from our operating activities. Management believes that Western Union’s current level of cash and future cash flows from operating activities are sufficient to meet the needs of its existing business.
 
As an integral part of our business, we receive funds from money transfers and certain other payment processing services sold in advance of settlement with payment recipients. These funds (referred to as “Settlement assets” on our combined balance sheets) are not used to support our operations. However, we do have the opportunity to earn income from investing these funds. We maintain a portion of these settlement assets in highly liquid investments (classified as “Cash and cash equivalents” within Settlement assets) to fund settlement obligations.
 
We expect that in connection with the spin-off we will transfer to First Data approximately $3.6 billion in the form of a combination of cash and our debt securities, which will include a dividend paid to First Data in the form of a promissory note from our subsidiary, FFMC, in an aggregate principal amount of approximately $[•] billion, the issuance by The Western Union Company to First Data of at least $800 million in exchange notes and a cash payment by The Western Union Company to First Data of approximately $[•] million, which will be financed. The amount to be paid to First Data and the amount and term of the debt we will incur have not been finally determined, but will be determined prior to the spin-off. A number of factors could affect this final determination, and the amount of combined indebtedness ultimately incurred could be substantially less than the amount assumed in this information statement.
 
We expect that FFMC will repay the promissory note on the distribution date or shortly thereafter with borrowings under a bridge loan facility it will enter into on or shortly after distribution date. The Western Union Company is considering and, subject to market conditions following the spin-off, expects to refinance the amounts borrowed by FFMC under the bridge loan with proceeds from debt The Western Union Company will issue or amounts The Western Union Company will otherwise borrow following the distribution date. However, we do not have any agreements or arrangements with any financial institution or other third parties with respect to such refinancing and there can be no assurance that The Western Union Company will be able to refinance the borrowings under the FFMC bridge loan.
 
We also expect to enter into a credit facility with certain financial institutions on the distribution date that will be used for general corporate purposes. We do not expect to incur any borrowings under the credit facility in connection with the spin-off.
 
We generated cash flow from operations in 2005 of $1,002.8 million, issued dividends to First Data of $417.2 million and loaned First Data affiliates $504.7 million. We believe historical cash flow generated from operations provides a reasonable expectation of future cash flows. In addition, we anticipate dividends paid to our stockholders after the spin-off will be significantly less than historical dividends paid to First Data, and we will not make loans to First Data after the spin-off. Considering 2005 pro forma interest expense of $218.9 million, estimated capital expenditures in 2006 of between approximately $200 million and $225 million (excluding capital expenditures relating to the spin-off) and estimated additional costs associated with being a stand-alone company of between $65 million and $75 million annually, our cash flow will provide us with
 
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opportunities to invest in our core business growth, new services and new markets. The timing of these investments will be based on specific opportunities. See “Unaudited Pro Forma Combined Financial Statements” beginning on page [    ] for further discussion of our pro forma interest expense and incremental costs associated with being a stand-alone company.
 
The following discussion highlights our cash flow activities during the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005, 2004 and 2003.
 
Cash and Cash Equivalents
 
Highly liquid investments (other than those included in Settlement assets) with original maturities of three months or less (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates market value. At June 30, 2006, December 31, 2005 and 2004, we held $655.8 million, $510.2 million and $469.7 million in cash and cash equivalents, respectively.
 
At June 30, 2006, December 31, 2005 and 2004, $328.4 million, $187.7 million and $167.8 million, respectively, of our cash and cash equivalents were held outside the United States. We currently plan to invest these funds overseas; however repatriating these funds to the United States could result in additional taxes.
 
Cash Flows from Operating Activities

 	  	Six Months Ended
June 30,	 	 	Years Ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
Source (use) (in millions)	  	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	438.7	 	 	$	451.6	 	 	$	927.4	 	 	$	751.6	 	 	$	633.7	 	
Depreciation and amortization	  	 	49.1	 	 	 	39.0	 	 	 	79.5	 	 	 	79.2	 	 	 	78.4	 	
Deferred income tax provision	  	 	21.5	 	 	 	18.2	 	 	 	24.9	 	 	 	47.6	 	 	 	63.3	 	
Realized (gain)/loss on derivative instruments	  	 	(7.9	)	 	 	7.7	 	 	 	0.5	 	 	 	23.2	 	 	 	30.8	 	
Other non-cash items, net	  	 	18.9	 	 	 	8.9	 	 	 	25.8	 	 	 	13.9	 	 	 	18.7	 	
Increase (decrease) in cash, excluding the effects of acquisitions and dispositions, resulting from changes in:	  				 				 				 				 				
Other assets	  	 	(39.4	)	 	 	(9.1	)	 	 	(8.8	)	 	 	(13.8	)	 	 	(27.5	)	
Accounts payable and accrued liabilities	  	 	(10.4	)	 	 	(14.2	)	 	 	(17.9	)	 	 	(6.3	)	 	 	(11.8	)	
Other liabilities	  	 	11.4	 	 	 	(34.2	)	 	 	(28.6	)	 	 	34.8	 	 	 	7.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	$	481.9	 	 	$	467.9	 	 	$	1,002.8	 	 	$	930.2	 	 	$	792.8	 	

Cash provided by operating activities increased during the six months ended June 30, 2006 compared to the six months ended June 30, 2005 despite a decrease in net income during the six months as a result of increases to non-cash expenses, including depreciation and amortization and other non-cash items.
 
Cash provided by operations has historically been driven by net income, and increased in 2005 compared to 2004, and 2004 compared to 2003, primarily due to consumer-to-consumer transaction growth as previously discussed. Changes in components of working capital are subject to fluctuations based on the timing of cash transactions related to settlements of certain liabilities.
 
Other non-cash items include impairments, bad debt reserves, gains and losses on disposals of fixed assets and other non-cash items.
 
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Cash Flows from Investing Activities

 	  	Six Months Ended
June 30,	 	 	Years Ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
Source (use) (in millions)	  	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Capitalization of contract costs	  	$	(79.9	)	 	$	(3.7	)	 	$	(22.5	)	 	$	(7.3	)	 	$	(57.7	)	
Capitalization of software development costs	  	 	(2.0	)	 	 	(1.8	)	 	 	(7.7	)	 	 	(15.7	)	 	 	(18.5	)	
Purchases of property and equipment	  	 	(32.5	)	 	 	(14.2	)	 	 	(34.8	)	 	 	(26.5	)	 	 	(23.6	)	
Notes receivable issued to agents	  	 	(140.0	)	 	 	(4.4	)	 	 	(8.4	)	 	 	—  	 	 	 	—  	 	
Acquisition of businesses, net of cash acquired, and contingent purchase consideration paid	  	 	—  	 	 	 	—  	 	 	 	(349.1	)	 	 	(28.7	)	 	 	(43.7	)	
Cash received (paid) on maturity of foreign currency forwards	  	 	7.9	 	 	 	(7.7	)	 	 	(0.5	)	 	 	(23.2	)	 	 	(30.8	)	
Purchase of equity method investments	  	 	—  	 	 	 	(5.4	)	 	 	(5.4	)	 	 	(42.0	)	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	$	(246.5	)	 	$	(37.2	)	 	$	(428.4	)	 	$	(143.4	)	 	$	(174.3	)	

Capital expenditures
 
Total aggregate payments capitalized for purchases of property and equipment, software development and contract costs were $65.0 million, $49.5 million and $99.8 million in 2005, 2004 and 2003, respectively. Amounts capitalized for contract costs relate to initial payments for new and renewed agent contracts and vary depending on the timing of when contracts are executed or renewed. The decrease in software development costs during 2005 compared to 2004 relates primarily to the timing of internally developed software projects. We estimate that capital expenditures in 2006 will be between approximately $200 million and $225 million, excluding capital expenditures relating to the spin-off. The increase in capital expenditures expected is primarily due to the initiation and renewal of certain large strategic agent contracts in 2006.
 
During the six months ended June 30, 2006, the increased property and equipment cash outflow was driven by the purchase of an office building. Also, in the first quarter of 2006, we executed certain large strategic agent contracts for which initial payments were made which drove the six months ended June 30, increase in capitalized contract costs.
 
Notes receivable issued to agents
 
From time to time, we make advances and loans to agents. In January 2006, we signed a six year agreement with one of our existing agents which included a four year loan of $140.0 million to the agent. The terms of the loan agreement require that a percentage of commissions earned by the agent (39% in 2006, 52% in 2007, 61% in 2008 and 64% in 2009) be withheld by us as repayment of the loan and the agent remains obligated to repay the loan if commissions earned are not sufficient. The loan receivable was recorded in “other assets” in the combined balance sheets as of June 30, 2006. We impute interest on this below market rate note receivable and have recorded this note net of a discount of $45.9 million as of June 30, 2006.
 
Acquisition of businesses, net of cash acquired, and contingent purchase consideration paid
 
During 2005, First Data acquired 100% of Vigo for $349.1 million, net of cash acquired. In 2004 and 2003, the majority of contingent consideration payments were made by First Data in connection with the acquisitions of Paymap Inc., or “Paymap,” and E Commerce Group, Inc., or “ECG,” made in the second quarter of 2002. First Data will contribute Vigo, Paymap and ECG to us as part of the spin-off.
 
Cash received (paid) on maturity of foreign currency forwards
 
Our foreign currency forward contracts that are not held to mitigate foreign currency exchange rate fluctuations in settlement assets and settlement obligations usually have maturities of one year, and the amounts
 
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received or paid on maturity for such contracts are driven primarily by variations in the market foreign exchange rate at the time of maturity and the forward contract rate.
 
Purchase of equity method investments
 
In 2004, we purchased 30% interests in two of our international money transfer agents. The aggregate purchase price paid was $42.0 million, net of $5.4 million of holdback reserves to cover claims arising from the acquisitions. The holdback reserves were paid in the first quarter of 2005.
 
Cash Flows from Financing Activities

 	  	Six Months
Ended
June 30,	 	 	Years Ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
 	  	 	 	 	 	 	 	 	 	 	(restated)	 	 	 	 	
Source (use) (in millions)	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Advances from/(to) affiliated companies	  	$	17.7	 	 	$	(282.8	)	 	$	(153.2	)	 	$	250.0	 	 	$	(359.0	)	
Capital contributed by parent in connection with acquisitions	  	 	—  	 	 	 	—  	 	 	 	369.2	 	 	 	28.7	 	 	 	44.1	 	
Proceeds from notes payable issued to affiliated companies	  	 	—  	 	 	 	—  	 	 	 	400.1	 	 	 	255.0	 	 	 	9.9	 	
Repayments of notes payable to affiliated companies	  	 	(100.0	)	 	 	—  	 	 	 	(246.5	)	 	 	(255.0	)	 	 	—  	 	
Additions to notes receivable from affiliated companies	  	 	(7.5	)	 	 	(25.1	)	 	 	(504.7	)	 	 	(270.7	)	 	 	—  	 	
Proceeds from repayments of notes receivable from affiliated companies	  	 	—  	 	 	 	—  	 	 	 	18.4	 	 	 	—  	 	 	 	—  	 	
Dividends to parent company	  	 	—  	 	 	 	—  	 	 	 	(417.2	)	 	 	(659.8	)	 	 	(324.2	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	$	(89.8	)	 	$	(307.9	)	 	$	(533.9	)	 	$	(651.8	)	 	$	(629.2	)	

Advances from/(to) affiliated companies
 
As part of First Data, excess cash generated from our domestic operations, not required to meet certain regulatory requirements, is paid periodically to First Data and is reflected as a receivable from affiliated companies. In addition, First Data and its subsidiaries provide a number of services on behalf of our businesses, including shared services, which are reimbursed periodically. The net payable to and receivable from affiliated companies is a function of the timing of cash sweeps to First Data net of any services First Data and its affiliates have provided.
 
Capital contributed by parent in connection with acquisitions
 
In 2005, Western Union received a contribution of capital in connection with the acquisition of Vigo. In 2004 and 2003, First Data contributed capital in connection with contingent consideration payments made by First Data in connection with the acquisitions of Paymap and ECG, both of which will be contributed to Western Union as part of the spin-off.
 
Notes payable to and receivable from affiliated companies
 
In 2005 and 2004, we made advances to affiliates of First Data in the form of notes of $504.7 million and $270.7 million, respectively, to finance certain international acquisitions made by those First Data affiliates. These notes were funded primarily through cash generated from our international operations and notes payable issued to affiliates of First Data with balances of $153.6 million at December 31, 2005. The notes payable were partially repaid in the first half of 2006. As part of the spin-off, substantially all notes payable and notes receivable to or from affiliates of First Data are expected to be settled in cash.
 
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Dividends to parent company
 
In 2005, 2004 and 2003, we paid dividends to First Data from profit generated from operations. The amount of dividends distributed in each year was impacted by the cash balances available as a result of loans made to affiliates.
 
Incremental Costs Associated with Being a Stand-Alone Company
 
Following the spin-off, we will incur recurring costs associated with being a stand-alone company that we did not incur as a part of First Data and are therefore not included in our historical combined financial statements. The following table reflects our annual estimates of such additional costs and variations in cost resulting from our separation from First Data, in each case, as if the spin-off had occurred on January 1, 2005:

  	  	(in millions)	 	
Estimated additional costs of being a stand-alone company as if the spin-off had occurred on January 1, 2005:	  				
Staffing additions and related costs to replace First Data support	  	$	76	 	
Corporate governance	  	 	19	 	
Information technology	  	 	13	 	
Corporate branding and global affairs	  	 	12	 	
Benefits and payroll administration	  	 	2	 	
Other	  	 	7	 	
	  	 	 	 	
Total estimated new costs of being a stand-alone company	  	 	129	 	
		
Less: First Data general corporate overhead allocation	  	 	(69	)	

Estimated incremental costs	  	$	60	 	

In addition to the costs noted above, subject to the finalization of our plans, we estimate additional costs of between $5 million and $15 million annually, including higher corporate branding and global affairs, information technology, procurement and other expenses related to being a stand-alone company. 
 
Our unaudited pro forma combined statements of income do not give effect to initial expenses directly attributable to the spin-off because of their non-recurring nature. A significant portion of these non-recurring charges to effect the separation will be incurred by First Data, such as investment banker fees, outside legal and accounting fees relating to the spin-off, office move costs, costs to separate information systems and temporary consulting costs. We will incur separation costs that have a future benefit to our company such as recruiting and relocation expenses associated with hiring key senior management positions new to our company, other employee compensation expenses and temporary labor used to develop ongoing processes. We estimate total non-recurring separation charges that our company will incur, which are not included in our unaudited pro forma combined statements of income, to be approximately $20 million to $25 million. We anticipate that substantially all of these costs will be incurred within 12 months of the spin-off. See “Our Relationship with First Data After the Spin-Off—Separation and Distribution Agreement—Expenses.”
 
Significant Non-cash Transactions
 
During the six months ended June 30, 2006 and the years ended December 31, 2005 and 2004, approximately 244,000, 50,000 and 50,000 shares, respectively, of restricted common stock of First Data were issued to certain Western Union employees in conjunction with First Data’s incentive compensation plans. There were no restricted shares of First Data common stock issued to Western Union employees during 2003.
 
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Off-Balance Sheet Arrangements
 
Other than facility and equipment leasing arrangements, we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
 
Pension Plans
 
We have two frozen defined benefit plans that together were underfunded by $69.8 million as of September 30, 2005. In 2005, we did not make a contribution to these plans and we do not intend to contribute to these plans in 2006 since, based on current asset return calculations and minimum funding requirements, no such contribution is required. We do not believe that recently enacted legislation relating to pension plans will have an impact on our funding requirement until at least 2008.
 
Letters of Credit
 
We had $32.8 million in outstanding letters of credit at December 31, 2005 with expiration dates through 2010, certain of which contain a one-year renewal option. The letters of credit are held in connection with lease arrangements and agent settlement agreements. We expect to renew the letters of credit prior to their expiration.
 
Contractual Obligations
 
The following table summarizes our contractual obligations to third parties as of December 31, 2005 and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in millions).

 	  	Payments Due by Period	
 	  	Total	  	Less than 1 Year	  	1–3 Years	  	4-5 Years	  	After 5 Years	
Notes payable to affiliates (a):	  	$	163.5	  	$	163.5	  	$	—  	  	$	—  	  	$	—  	
Operating leases	  	 	99.3	  	 	25.1	  	 	43.4	  	 	7.0	  	 	23.8	
Purchase obligations (b)	  	 	23.8	  	 	14.9	  	 	6.2	  	 	2.7	  	 	—  	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
	  	$	286.6	  	$	203.5	  	$	49.6	  	$	9.7	  	$	23.8	

(a)	Expected remaining balances to be paid in full or forgiven at the time of the spin-off.	
(b)	Many of our contracts contain clauses that allow us to terminate the contract with notice, and with or without a termination penalty. Termination penalties are generally an amount less than the original obligation. Certain contracts also have an automatic renewal clause if we do not provide written notification of our intent to terminate the contract. Obligations under certain contracts are usage-based and are, therefore, estimated in the above amounts. Historically, we have not had any significant defaults of our contractual obligations or incurred significant penalties for termination of our contractual obligations.	
 
Critical Accounting Policies
 
Management’s discussion and analysis of results of operations and financial condition is based on our combined financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that management make estimates and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities and other related disclosures. Actual results may or may not differ from these estimates. We believe that the understanding of certain key accounting policies and estimates are essential in achieving more insight into our operating results and financial condition. These key accounting policies include stock-based compensation, income taxes, derivative financial instruments and capitalized costs.
 
Stock-Based Compensation
 
We adopted SFAS 123R effective January 1, 2006. SFAS 123R requires all stock-based payments to employees to be recognized in the income statement based on their respective grant date fair values over the
 
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corresponding service periods and also requires an estimation of forfeitures when calculating compensation expense. We selected the modified-prospective method of adoption and straight-line amortization of compensation cost over the requisite service period. We currently utilize the Black-Scholes option pricing model to measure the fair value of stock options granted to employees and directors. While SFAS No. 123R permits entities to continue to use such a model, the standard also permits the use of a more complex binomial, or “lattice” model. Based upon the type and number of stock options expected to be issued in the future, we have determined that we will continue to use the Black-Scholes model for option valuation. Option-pricing models require us to estimate a number of key valuation inputs including expected volatility, expected dividend yield, expected term and risk-free interest rate. The most subjective estimates are the expected volatility of the underlying stock and the expected term. Accordingly, the fair value of stock options are affected by the assumptions we select. Stock-based compensation expense, including the impact of adopting SFAS 123R, was $6.1 million for the six months ended June 30, 2006.
 
Refer to Note 15—“Stock Compensation Plans” of our historical combined financial statements for a discussion of First Data’s stock-based compensation plans and the adoption of SFAS 123R.
 
Income taxes
 
Income taxes, as reported in our combined financial statements, represent the net amount of income taxes we expect to pay or receive from various taxing jurisdictions in connection with our operations. We provide for income taxes based on amounts that we believe we will ultimately owe. Inherent in the provision for income taxes are estimates and judgments regarding the tax treatment of certain items and the realization of certain offsets and credits. In the event that the ultimate tax treatment of items or the realizations of offsets or credits differ from our estimates, we may be required to significantly change the provision for income taxes recorded in our financial statements.
 
To address certain aspects of a 2003 legal restructuring of our international operations, First Data initiated discussions with the Internal Revenue Service pursuant to the Internal Revenue Service’s APA Program. If an APA is successfully negotiated, we generally will avoid further examination, during the term of the APA, of the transfer pricing methods applicable to, and valuations of, the covered transactions. We continue to negotiate with the Internal Revenue Service in the APA process, and while we hope to reach a resolution through the process, there can be no assurances that the APA negotiations will be resolved in a manner acceptable to us. If not so resolved, the matter would then likely proceed to other forums within the Internal Revenue Service. We have established contingency reserves for material, known tax exposures, including the potential for tax audit adjustments with respect to taxes associated with our foreign business that is the subject of the 2003 legal restructuring and the Internal Revenue Service’s APA Program discussions referenced above. These tax reserves reflect what we believe to be reasonable assumptions as to the likely resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed the Company’s related reserve. Regarding the 2003 legal restructuring, we have benefited by having our income from certain foreign-to-foreign money transfer transactions taxed at relatively low foreign tax rates rather than the United States statutory tax rate. The amount of taxes attributable to such rate differential is included in the “Foreign rate differential” line in the effective tax rate reconciliation in Note 9—“Income Taxes” to our historical combined financial statements and cumulatively totaled $131.6 million through December 31, 2005. Any differences from our positions as recorded in our financial statements upon resolution of these issues will be reflected as a part of income tax expense in the period during which the issues are resolved. Such resolution could also affect our effective tax rate in future periods.
 
Derivative Financial Instruments
 
We use foreign currency forward contracts to mitigate the risks associated with changes in foreign currency. As required, these instruments are reflected in our combined balance sheets at fair value. Although our intent was
 
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for these derivatives to qualify for hedge accounting, during an evaluation of the documentation requirements under applicable derivative accounting rules, we determined that our hedge documentation was not adequate at the inception of the derivative agreements to qualify for hedge accounting. As a result, all increases or decreases in the fair market value of the derivative instruments are recognized in the combined statements of income whereas increases and decreases to such derivatives were previously recognized in accumulated other comprehensive income or loss on our combined balance sheets.
 
We intend to enter into foreign currency forward contracts in the future, which we intend to designate as cash flow hedges. We also intend to redesignate existing forward contracts with revised documentation to allow for hedge accounting treatment for such existing and future foreign currency forward positions, which we intend to do as expeditiously as possible. To the extent these hedges do not qualify as cash flow hedges, or if we cease to believe that forecasted transactions would occur, the changes in the fair value of those derivatives used as hedges would be reflected in earnings. Our company does not believe it is exposed to more than a nominal amount of credit risk with respect to its currency forward contracts, as the counterparties are established, well-capitalized financial institutions. The estimated fair value of our derivative financial instruments is based on market and dealer quotations. Accordingly, these estimated values may not be representative of actual values that could have been realized as of December 31, 2005 or 2004 or that will be realized in the future.
 
Capitalized Costs
 
We capitalize initial payments for new contracts and contract renewals associated with agent contracts and software costs. Capitalization of these costs is subject to strict accounting policy criteria and requires management judgment as to the appropriate time to initiate capitalization.
 
Our accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated ongoing future cash flows from the contract or the termination fees we would receive in the event of early termination of the contract.
 
We develop software used in providing services. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when we have completed all planning, designing, coding and testing activities that are necessary to determine that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is available for general use. Currently unforeseen circumstances in software development could require us to implement alternative plans with respect to a particular effort, which could result in the impairment of previously capitalized software development costs.
 
New Accounting Pronouncement
 
The Financial Accounting Standards Board (“FASB”) has issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN 48”), regarding accounting for, and disclosure of, uncertain tax positions. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact FIN 48 will have on our combined results of operations and financial position.
 
Quantitative and Qualitative Disclosures About Market Risk
 
We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency, exchange rates and interest rates.
 
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Foreign Currency Risk
 
We are exposed to changes in currency rates as a result of our investments in foreign operations and from transactions in currencies other than the United States dollar. A risk management program is in place to manage these risks.
 
We provide money transfer services in more than 200 countries and territories. Foreign exchange risk is managed through the structure of the business and an active risk management process. We settle with the vast majority of our agents in United States dollars or euros. However, in certain circumstances, we settle in the agents’ local currencies. We typically require the agent to obtain local currency to pay recipients. Thus, we generally are not reliant on international currency markets to obtain and pay illiquid currencies. The foreign currency exposure that does exist is limited by the fact that the majority of transactions are paid within 24 hours after they are initiated. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency helping to further provide protection against currency fluctuations. Our policy is not to speculate in foreign currencies and we promptly buy and sell foreign currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.
 
We use foreign currency forward exchange contracts to mitigate risks associated with changes in foreign currency exchange rates on transactions denominated primarily in the euro, British Pound, Canadian dollar and Swiss franc. Although historically it has been our intent for these foreign currency forward contracts to qualify as cash flow hedges, during an evaluation of the documentation requirements under applicable derivative accounting rules, we determined that our hedge documentation was not adequate at the inception of the derivative agreements to qualify for hedge accounting. As a result, changes in the fair market value of our outstanding derivative instruments, which are impacted primarily by fluctuations in the euro, are now recognized in our combined statements of income. Previously, changes to the fair value of our derivative instruments were recognized on our combined balance sheets and did not directly impact our net income. This change has resulted in volatility in our net income for the periods presented. For example, during the six months ended June 30, 2006, we had pre-tax derivative losses of $27.2 million, and for the six months ended June 30, 2005 we had pre-tax derivative gains of $36.8 million. In addition, during the year ended December 31, 2005, we had pre-tax derivative gains of $45.8 million, and we had pre-tax derivative losses of $30.2 million and $37.9 million during the years ended December 31, 2004 and 2003, respectively. We anticipate our results will be subject to volatility as a result of this change until we are able to redesignate the affected forward contracts as hedges, with revised documentation to allow for hedge accounting treatment, which we intend to do as expeditiously as possible. We also intend to have the appropriate documentation required for future foreign currency forward positions to qualify for hedge accounting treatment.
 
A hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all the currencies in which our profits are denominated would result in a decrease/increase to pretax income of approximately $16.6 million as of December 31, 2005. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.
 
Interest Rate Risk
 
Our company is exposed to market risk from changes in interest rates. Our investment securities are primarily fixed rate interest-bearing securities. These investments arise primarily from cash received and invested relating to money transfers and other payment services awaiting redemption. We have classified these investments as available-for-sale. Accordingly, they are carried on our Combined Balance Sheets at fair market value. The interest rate risk is not considered significant to our financial position or results of operations. Our exposure to market risk for changes in interest rates will change based on the terms of the financing and the expected repayment of notes receivable and payable to affiliates in connection with the spin-off.
 
In order to mitigate the risk from fluctuating interest rates from our debt, we intend to pursue a strategy of balancing fixed and floating rate components.
 
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 OUR BUSINESS
 
Overview
 
Western Union, a leader in global money transfer, provides people with fast, reliable and convenient ways to send money around the world, pay bills and purchase money orders. The Western Union ® brand is globally recognized. Our services are available through a network of over 270,000 agent locations that offer Western Union services in more than 200 countries and territories. Each location in our agent network is capable of providing one or more of our services. As of June 30, 2006, approximately 75% of our locations had experienced money transfer activity in the prior twelve months. Our consumer-to-consumer money transfer service enables people to send money around the world in minutes. Our consumer-to-business service provides consumers with flexible and convenient options for making one-time or recurring payments.
 
In 2005, we generated $4.0 billion in total combined revenues and $927.4 million in combined net income. Demand for our services has steadily increased over the past several years. Our consumer-to-consumer transactions grew at a compound annual growth rate of 21% from 2001 to 2005. We handled 119 million consumer-to-consumer money transfers in 2005, an increase of 23% over 2004. Our 215 million consumer-to-business transactions in 2005 represented a 12% increase over 2004.
 
We believe that brand strength, the size and reach of our global network, convenience and reliability for our consumers have been key to the growth of our business. As we continue to meet the needs of our consumers for fast, reliable and convenient money transfer services, we are also working to enhance our existing services and provide our consumers with broad access to an expanding portfolio of payment and other financial services.
 
History and Development
 
The Western Union Company has roots back to 1851. It first traded on the New York Stock Exchange in 1865. In 1884, Western Union was one of the original 11 companies included on the first Dow Jones average listing. We have a long history of providing innovative services, including creating the universal stock ticker and launching the first United States commercial communications satellite service. We introduced our consumer-to-consumer money transfer service in 1871. We began offering consumer-to-business payment services in 1989 when we introduced Western Union Quick Collect, providing consumers in the United States with convenient walk-in access to our agent network to pay bills in cash.
 
Since First Data acquired us in 1995, we have become a leader in the development of a formal global remittance market. Today, we offer money transfer services under the Western Union, Orlandi Valuta and Vigo brands in over 200 countries and territories.
 
The Western Union Business
 
The Western Union business model is straight-forward. Our revenue is principally generated by money transfer and payment transactions. We derive our revenue primarily from two sources. Most of our revenue comes from fees that consumers pay when they send money. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency.
 
In our consumer-to-consumer segment we provide our third-party agents with our multi-currency, real-time money transfer processing systems used to originate and pay money transfers. Our agents provide the physical infrastructure and staff required to complete the transfers. We generally pay our agents a commission based on a percentage of revenue. The commission is shared between the agent that initiated the transaction, the “send agent,” and the agent that paid out the transaction, the “receive agent.” For most agents, the costs of providing the physical infrastructure and staff are typically covered by the agent’s primary business (e.g., postal services, banking, check cashing, travel and retail businesses), making the economics of being a Western Union agent attractive to our agents. Western Union’s global reach and loyal consumer base allow us to attract agents we
 
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believe to be high quality. We take little credit risk associated with consumer delinquency, because the vast majority of our transactions are initiated in cash.
 
In our consumer-to-business segment we offer consumers the option to make consumer-to-business payments electronically over the telephone or the Internet or cash payments in person at an agent location. We process electronic payments using the consumer’s credit card, debit card or bank account. We process cash payments much like we process consumer-to-consumer transactions.
 
Geographic Presence
 
Approximately 80% of our agent locations are outside the United States. Our services are available in almost every country or territory. We have offices in more than 40 countries. In the United States, Costa Rica, Russia and Australia, our offices include customer service centers, where our employees answer operational questions from agents. Other offices, including regional management offices in Denver, Dublin, Miami, Vienna and Hong Kong, provide sales, marketing, data processing and other services. Our employees and members of senior management reflect the global nature of our business; natives of dozens of countries, they speak many languages.
 
Western Union agents include large networks such as post offices, banks and retailers. We have agreements with postal organizations in France, Germany, Spain, Russia, Argentina, Australia, China, India, New Zealand and elsewhere. Our services are offered through banks such as Société Générale, BNP Paribas, Credit Lyonnais, Millennium BCP and the State Bank of India. National and international retailers in the network include Kroger and Publix in the United States and Travelex and DHL International. Many of our agents have multiple locations. Our agents know the markets they serve. They work with our management to develop strategic plans for their markets, and many of our larger agents contribute financial resources to marketing the business.
 
Our Strengths
 
We believe our strengths position us to continue as the provider of choice for millions of consumers when they send money. Our strengths include our:
 
Strong relationships with high quality agents and businesses . We interact with millions of consumers around the world primarily through our global agent network. Our agents facilitate the global distribution and convenience that help define our Western Union brand, which in turn helps create demand for our services and helps us to recruit and retain agents. Our agents tend to be established organizations that provide an array of other consumer products and services, including postal services, groceries, banking, check cashing, travel and other daily necessities. Many are open during nontraditional banking hours, such as nights and weekends, making it easier for consumers to use our services. Although our agent contracts are generally for 5 year terms, our top 40 agents globally have been with us an average of more than 12 years; in 2005, these agents generated approximately 50% of our consumer-to-consumer combined revenue. We occasionally acquire equity interests in certain of our agents to align their long-term interests with ours. Currently we hold minority interests in agents that have a presence in Ireland, the United Kingdom, Spain, Greece and Italy.
 
We have relationships with more than 4,500 businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies (all sometimes referred to as “billers”). These relationships are a core component of our consumer-to-business payment services. In 2005, our top 20 billers represented approximately 45% of our consumer-to-business revenue. On average, we have provided our bill payment services to our top 20 billers for more than 10 years.
 
Global distribution network . The Western Union, Orlandi Valuta and Vigo agent networks are the foundation of our international presence. Our agent locations include more than 5,000 offering Orlandi Valuta branded service and approximately 20,000 offering Vigo branded service, with the remainder offering Western
 
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Union branded service. A small number offer service under two or three brands. Our global footprint is based on more than a decade of building relationships with agents worldwide.
 
Success in the consumer-to-consumer money transfer business depends in large part on providing quality service at convenient send and receive locations. Our global network, extending to over 200 countries and territories, provides that convenience. We have emphasized the development of our receive network around the world over the last five years to align the supply of agent locations in the markets that primarily send transactions with those that pay them. Today, we believe we are well-positioned in key receive markets, such as China and India, to meet consumer demand as it evolves with shifts in migration patterns.
 
To complement the convenience offered by our network’s global physical locations, in certain countries we have made our services available through other channels, such as our Internet service, westernunion.com, which allows consumers to send funds through our website, our telephone money transfer service and our direct-to-bank money transfer service, which allows consumers to send money directly to a bank account. For financial information regarding our foreign and United States operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement.
 
Established brands. Our Western Union ® brand is built on a foundation of more than a century of history and consumer-focused service. Our consumers have told us that they believe the Western Union brand represents speed, reliability, trust, value and convenience. In the United States, where the brand has existed the longest, there is a very high level of brand awareness among money transfer users. The international expansion of our agent network over the past decade has made the Western Union brand visible today virtually everywhere consumers send and receive money. We are building the level of awareness in Europe and Asia. As people move and travel around the world, they are able to find a well recognized service to send funds to others.
 
We also offer money transfer services under the Orlandi Valuta ® and Vigo SM brands. Over the past three years, Western Union branded transactions have grown the fastest of the three brands. Through our Western Union Quick Collect brand, as well as our Speedpay brand, we offer cash-based and electronic consumer-to-business payment services.
 
Our operating results over the past several years have allowed us to invest significantly each year to support our brands. In 2005, we invested more than $270 million to market, advertise and promote our services and our agents made significant additional investments.
 
Consumer relationships . One of our strengths has been our focus on our consumers and offering them fast, reliable money transfer services. Our global loyalty card program, offered for both consumer-to-consumer and consumer-to-business services, is available in a growing number of countries. We launched our Gold Card, the principal feature of the program, in the United States in 2002. As of June 30, 2006, the loyalty program was available in 58 countries and had more than 6.5 million active cards, primarily in the United States. The Gold Card offers consumers faster service at the point-of-sale, rewards such as free telephone time and service enhancements including, on a pilot basis in select markets, remittance protection insurance. On average, a Gold Card consumer initiates more transactions and has a higher rate of retention than a non-carded consumer. In the United States more than 30% of consumer-to-consumer transactions are completed using a Gold Card. We are also seeing increases in usage in Europe and Asia where we began offering the Gold Card in 2004. The global loyalty program is one component of our CRM program designed to support and enhance long-term relationships with our consumers. Consumer databases supplement these efforts by providing insight on consumer preferences so that we can selectively target consumer communications and marketing.
 
Operational excellence . An important part of operational excellence is steadfastly reliable technology. Our systems enable us to provide worldwide, multi-currency and real-time money transfer processing with a high degree of reliability. We provide dynamic computer host-to-host interfaces to our agents and billers that enable them to offer money transfer and payment services within their own computer environment. We also provide settlement and reconciliation software to our agents and billers with reporting and analysis tools to help them
 
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monitor many aspects of their money transfer business, including transactions, profitability and cash flow. Behind the scenes, our settlement systems facilitate the periodic settlement of accounts between our company and our agents and billers. Our systems and processes enable our agents to pay money transfers in over 120 currencies. Many of our agents can also pay in multiple currencies at a single location, a function that is being utilized in a number of locations in the agent network.
 
Flexibility is another important component of operational excellence. We continue to work to implement consumer focused enhancements to our services. These efforts have resulted in offerings like telephone and Internet services, and money transfers paid directly to a bank account or to a stored-value card.
 
Attractive financial profile . While we expect to incur significant interest costs in connection with the debt we will incur as part of the spin-off, our revenue and net cash flow will provide us with opportunities to invest in our core business growth, in new services and in new markets. In 2005, we generated $4.0 billion in combined revenues and over $1.0 billion in combined net cash provided by operating activities. Our combined revenue has grown at a compound annual growth rate of 15% since 2001.
 
Experienced management team . Our management team is substantially the same team that managed the Western Union business for First Data before the spin-off. Business leaders at the senior management level and below were involved in Western Union’s global expansion and creating and implementing our long-term strategy. Collectively, members of our executive team have an average of 8 years with us or First Data.
 
Our Strategy
 
We believe that our strengths position us well to continue to pursue global markets and remain focused on our consumers and their needs. To do so, we developed a number of strategies, including:
 
Expand and diversify global distribution . We are focused on selectively expanding our agent network and relationships with billers. Examples of this strategy and our recent success in implementing it include:
 
 	•	 	Using existing agent locations to launch new services, such as outbound service from Mexico in 2004, which generated over $10 million of revenue in 2005.	
 
 	•	 	Adding or enhancing services allowing consumers in many countries to send and receive money transfers within the same country. Excluding the United States and Canada, these intra-country transactions generated over $50 million in revenue in 2005.	
 
 	•	 	Launching our Internet service, westernunion.com, outside the United States and Canada, beginning with the United Kingdom in 2004. Our Internet service generated nearly $70 million in revenue in 2005, up 47% from 2004, and is profitable.	
 
 	•	 	Expanding our network in key receive markets, such as China and India. Combined, China and India represented about 3% of our total combined revenue in 2005.	
 
We intend to continue to identify and create opportunities to generate new revenue from our existing distribution channels, including through acquisitions and by equity investments in our agents.
 
Our strategy is to align the number of send and receive agent locations in our markets to correspond to the send and receive demands of our consumers in each market. We have focused on building receive networks in countries with large inbound remittance markets, particularly in Latin America, Africa and eastern Europe, as well as key countries like China, India and elsewhere in Asia. This increased presence in receive markets provides immigrants from these countries confidence that money they send home will be delivered to a convenient location they know. In the United States, western Europe and other predominantly send markets, we add agent locations in locales that tend to attract immigrants. While we continue to develop our global network, we expect the majority of our growth in the future to come from existing locations.
 
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Today, we offer cash-based bill payment services primarily in the United States, and we offer consumer-to-business payment services to and from other countries served by our agent network. We intend to pursue continued global expansion of cash and electronic consumer-to-business payments services, through our existing agent network and other channels.
 
Build our brands and enhance our consumers’ experience . We remain focused on our brands and make sizable investments to build our brands and enhance our consumers’ experience. In each of the last three years, we have spent approximately 7% of our combined revenue on marketing, including advertising, events, loyalty programs, and employees dedicated to marketing activities. Building our brands and enhancing the consumer experience are strategies that are grounded in our global CRM programs, which emphasize building a lifetime relationship with our consumers and their families. The Western Union Gold Card is a key part of this strategy. The Gold Card program helps build satisfaction and loyalty by offering consumer recognition, added convenience at the point-of-sale and rewards for multiple transactions. As we continue to introduce the Gold Card in additional countries, we expect to combine the benefits of increased usage with enhanced consumer relationships. In addition, in each of the last three years we have invested in consumer-to-consumer pricing decreases designed to meet consumer needs, maximize market opportunities and strengthen our overall competitive position. Pricing decreases are implemented in selected corridors or zip codes. The impact of each pricing decrease and any offsetting increase in volume is shared with our agents through commissions.
 
Develop consumer convenience and choice . We focus our product development strategy on providing money transfer services that meet consumers’ needs for convenience, choice and control. Our Internet service (westernunion.com), Telephone Money Transfer (a service that allows consumers to speak with Western Union operators in a number of languages by phone to send funds), Money Transfer by Phone (a service that allows consumers to speak with Western Union operators in a number of languages by phone from agent locations to send funds), Direct to Bank (a service that allows consumers to send funds directly to a bank account), Account to Cash (a service that allows consumers to debit their bank accounts and send the money through Western Union for payment at any agent location), Home Delivery of remittances (a service that allows funds to be delivered to the recipient rather than picked up at an agent location) and Western Union@ATM (a service that allows consumers to transfer funds to or from an ATM) are all examples of service enhancements that address our consumers’ needs. We intend to continue to develop these types of enhancements, building on insights from our agents and the knowledge we gain from CRM activities.
 
In the United States, we offer consumers the ability to send payments to billers through a variety of channels, including walk-in locations, telephone service, IVR and Internet-based service. In order to pay their bills through these channels, consumers can use various means of payments—checks, credit cards, debit cards or cash. We intend to increase our consumer payments business in the United States by pursuing existing and emerging electronic payments services and technologies. Equally as important, we plan to expand this business outside the United States, in ways that will vary from market to market.
 
Explore new service offerings . Western Union is exploring new ways to bring additional services to our consumers around the world. For example, Western Union International Bank, based in Vienna, Austria, has the ability to establish branches and offer money transfer and other financial services directly to consumers in each of the 25 member states of the European Union. We continue to investigate new services—either offered by our company directly or through third parties—that are meaningful to our large consumer base.
 
Our Segments
 
We manage our business around the consumers we serve and the type of services we offer. Each segment addresses a different combination of consumer needs, distribution networks and services.
 
 	•	 	Consumer-to-consumer—provides money transfer services between consumers, primarily through a global network of third-party agents using our multi-currency, real-time money transfer processing systems.	
 
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 	•	 	Consumer-to-business—focuses on payments from consumers to billers through our networks of third-party agents and various electronic channels. In 2005, substantially all of the revenue from this segment was generated from transactions in the United States.	
 
Our other businesses not included in these segments include Western Union branded money orders, available through a network of third-party agents, and prepaid services. Prepaid services include a Western Union branded phone card and top-up services for third parties that allow consumers to pay in advance for mobile phone and other services.
 
Consumer-to-Consumer Segment
 
Individual money transfers from one consumer to another are the core of our business, representing 82% of our total combined revenues for 2005. We offer consumers a choice of ways to send money. Although most remittances are sent in cash at one of our hundreds of thousands of agent locations worldwide, in some countries we also offer the ability to send money over the Internet or the telephone, using a credit or debit card or, in some cases, through bank debits (automated clearing house, or “ACH,” withdrawals). Some agent locations also accept credit or debit cards to initiate a transaction. We also offer consumers several options to receive a money transfer. While the vast majority of transfers are paid in cash at agent locations, in some places we offer payments directly to the receiver’s bank account or a stored-value card.
 
Operations
 
Our revenue is derived primarily from transaction fees charged to consumers to transfer money. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency.
 
In a typical money transfer transaction, a consumer goes to one of our agent locations, completes a form specifying, among other things, the name and address of the recipient, and delivers it, along with the principal amount of the money transfer and the fee, to the agent. This sending agent enters the transaction information into our data processing system and the funds are made available for payment, usually within minutes. The recipient enters any agent location in the designated receiving area or country, presents identification and is paid the transferred amount. Recipients do not pay a fee (although in limited circumstances, a tax may be imposed on the payment of the remittance). We determine the fee paid by the sender, which generally is based on the principal amount of the transaction and the locations from and to which the funds are to be transferred.
 
We maintain three separate multi-currency, real-time money transfer processing systems through which a consumer can transfer money from a location within that system. Money transfer services are available under the Western Union ® , Orlandi Valuta ® and Vigo SM brands, at least one of which is available in each location in the agent network. The development and maintenance of certain of our money transfer processing systems are outsourced to a third party.
 
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Approximately 80% of our consumer-to-consumer transactions involve at least one non-United States location. No individual country outside the United States and Mexico accounted for more than 10% of the segment’s revenue for the six months ended June 30, 2006 or the years ended December 31, 2005, 2004 and 2003. Mexico, shown separately in the table below, accounted for the largest single source of foreign country revenue in the segment. Certain of our agents facilitate a large number of transactions; however, no individual agent accounted for greater than 10% of the segment’s revenue during these periods. The table below presents the geographic components of segment revenue as a percentage of the combined total.

 	  	 	 	 	Year Ended December 31,	 	
 	  	Six Months Ended
June 30, 2006	 	 	2005	 	 	2004	 	 	2003	 	
International (a)	  	72	%	 	72	%	 	71	%	 	69	%	
Domestic (b)	  	17	%	 	19	%	 	21	%	 	23	%	
Mexico (c)	  	11	%	 	9	%	 	8	%	 	8	%	

(a)	Represents transactions between and within foreign countries (excluding Canada and Mexico), transactions originated in the United States or Canada destined for foreign countries and foreign country transactions destined for the United States or Canada. Excludes all transactions between or within the United States and Canada and all transactions to and from Mexico as reflected in (b) and (c) below.	
(b)	Represents all transactions between and within the United States and Canada.	
(c)	Represents all transactions to and from Mexico.	
 
Seasonality
 
Consumer-to-consumer segment revenue typically increases sequentially from the first quarter to the fourth quarter each year and declines from the fourth quarter to the first quarter of the following year. This seasonal fluctuation is related to the holiday season in the United States and other countries during the fourth quarter.
 
Services
 
We offer money transfer services worldwide. The different ways consumers can send or receive money include the following:
 
Walk-in money transfer service. Walk-in money transfer service is available at each of our sending agent locations around the world. The majority of Western Union, Orlandi Valuta and Vigo remittances are “will call” transactions, in which cash is collected by the agent and payment (usually cash) is available for pick-up at another agent location in the designated receive country, usually within minutes.
 
Western Union continues to develop new services that enhance consumer convenience and choice and that are customized to meet the needs of consumers in the regions where these services are offered. In the United States, consumers can use a debit card to send transactions from many agent locations. In some United States outbound corridors and in select international corridors, Western Union provides Direct to Bank service, enabling a consumer to send a transaction from an agent location directly to a bank account in another country. In certain countries, Western Union offers payout options through a debit or stored-value card, or through a money order. In a number of countries in Latin America and the Caribbean, Western Union agents offer a bank deposit service, in which the paying agent provides the receiver the option to direct funds to a bank account or to a stored-value card. Vigo also offers Direct to Bank and home delivery service in certain receive countries.
 
Our “Next Day Delivery” option is a money transfer that is available for payment 24 hours after it is sent. This option is available in certain markets for domestic service within the United States, and in select United States outbound and international corridors, including Mexico. The Next Day Delivery service gives our consumers a lower-priced option for money transfers that do not need to be received within minutes. The service still offers the convenience, reliability and ease-of-use that the Western Union brand represents.
 
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Our “Money Transfer by Phone” service is available in select Western Union agent locations in the United States. In a Money Transfer by Phone transaction, the consumer is able to use a telephone in the agent location to speak to a Western Union representative in one of several languages. Typically the sender provides the information necessary to complete the transaction to the Western Union operator on the phone and is given a transaction number, which the sender takes to the agent’s in-store representative to send the funds.
 
Online money transfer service. Our Internet website, westernunion.com, allows consumers to send funds on-line, using a credit or debit card, for pay-out at any of our Western Union branded agent locations around the world. Transaction capability at westernunion.com was launched in the United States in 2000 and in Canada in 2002. Since 2004, Western Union has expanded the service to additional countries outside the United States.
 
Telephone money transfer service. Our Telephone Money Transfer service allows Western Union consumers to send funds by telephone without visiting an agent location. Consumers call a toll-free number in the United States or the United Kingdom and use a debit card or credit card to initiate a transaction. The money transfer is paid at an agent location in the ordinary way.
 
Distribution and Marketing Channels
 
We offer our consumer-to-consumer service through our global network of third-party agents and the other initiation and payment methods discussed above. Western Union provides central operating functions such as transaction correction, marketing support and customer relationship management to our agents.
 
Some of our Western Union agents outside the United States manage subagents. Although these subagents are under contract with our primary agents (and not with Western Union directly), the subagent locations have access to the same technology and services that our agent locations do.
 
Our international agents are able to customize services as appropriate for their geographic markets. In some markets individual agents are independently offering specific services such as stored-value payout options and direct to bank service. Our marketing relies on feedback from our agents and consumers, and our agents also market our services.
 
In February 2005, Western Union International Bank began operations. We chartered the bank in order to adapt to the challenges presented by the growing trend among the member states of the European Union to regulate the money transfer business. Western Union International Bank holds a full credit institution license, allowing it to offer a range of financial services throughout the 25 member states of the European Union. Today, the bank offers retail and online money transfer services in a few countries.
 
Industry Trends
 
We participate in a large and growing market for money transfer. Growth in the money transfer business tends to correlate to immigration and related employment rates worldwide. Therefore, an indicator for future growth is the size of the international migrant population, which to a certain extent follows economic opportunity worldwide. In 2006, the United Nations reported that there were 191 million people living outside their country of origin in 2005. We anticipate that demand for money transfer services will continue to grow as individuals continue to migrate to countries outside of their country of origin.
 
Aite, an independent research and advisory firm, estimated in a January 2005 report that the total value of remittances sent by workers to developed and emerging regions would be $249 billion in 2005 and that this amount would grow annually at a rate of 8% through 2007. These figures were estimated primarily by using balance of payments data reported by the International Monetary Fund, the Inter-American Development Bank, central banks and money transmitters. They do not capture money transfers sent through informal channels and do not measure the size of the intra-country market. The World Bank estimates that unrecorded remittances are at least half as large as recorded remittances.
 
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By comparison, in 2005, consumers transferred $42 billion in consumer-to-consumer transactions through our company in both cross-border and intra-country transactions. Funds transferred through our agent network have increased at a compound annual growth rate of 24% from 2003 to 2005.
 
Another significant trend impacting the money transfer industry is the increase in regulation in recent years. Regulation in the United States and elsewhere focuses, in part, on anti-money laundering and anti-terrorist financing compliance efforts. Regulations require money transfer providers, banks and other financial institutions, to develop systems to monitor and report appropriately on certain transactions. One of the goals of increased regulation is to find ways to move consumers away from informal, unregulated networks into formal and reported channels where transactions can be recorded, monitored and, when required, reported to law enforcement or other public authorities.
 
Competition
 
We face robust competition in the highly-fragmented consumer-to-consumer money transfer industry. We compete with a variety of money transfer service providers, including:
 
 	•	 	Global money transfer providers —Global money transfer providers allow consumers to send money to a wide variety of locations, in both their home countries and abroad.	
 
 	•	 	Regional money transfer providers —Regional money transfer companies, or “niche” players, provide the same services as global money transfer providers, but focus on a small group of corridors or services within one region, such as North America to the Caribbean, Central or South America, or western Europe to north Africa.	
 
 	•	 	Banks —Banks of all sizes compete with us in a number of ways, including bank wire services and card-based services. We believe that banks often use wire transfer services and other money transfer methods to attract immigrant consumers to open bank accounts.	
 
 	•	 	Informal networks —Informal networks enable people to transfer funds without formal mechanisms, such as receipts, and, often, without compliance with government reporting requirements.	
 
 	•	 	Alternative channels —Alternative channels, including mail and commercial courier services, online money transfer services that allow consumers to send money over the Internet and card-based options, such as ATM cards and stored-value cards, allow consumers to send or receive money.	
 
The most significant competitive factors in consumer-to-consumer remittances relate to brand recognition, distribution network, consumer experience and price.
 
For additional details regarding our consumer-to-consumer segment, including financial information regarding our international and United States operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement.
 
Consumer-to-Business Segment
 
We provide a portfolio of electronic and cash payment options that provide consumers with fast and convenient ways to make one-time or recurring payments. These services facilitate payments to billers. Revenues from this segment represented 15% of our combined revenue for 2005.
 
Operations
 
Our revenue in this segment is derived primarily from transaction fees paid by the consumer or the biller. These fees are typically less than the fees charged in our consumer-to-consumer segment. In order to make an electronic payment, the consumer or biller initiates a transaction over the telephone or the Internet which we
 
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process using the consumer’s credit card, debit card or bank account (processed through the ACH). In order to make a cash payment, the consumer goes to an agent location and makes the payment to the agent. While we continue to pursue international expansion of our offerings in select markets, substantially all of the segment’s 2005 revenue was generated in the United States. No individual biller accounted for greater than 10% of this segment’s revenue during all periods presented.
 
Services
 
Our consumer-to-business services strive to give consumers choices as to the payment type and method of payment, and include the following:
 
Electronic payments. Consumers and billers use our Speedpay service in the United States and the United Kingdom to make consumer payments to a variety of billers using credit cards and debit cards and ACH. Payments are initiated through a number of channels, including biller hosted websites, IVR units and call centers.
 
Our Equity Accelerator service is provided in the mortgage service industry, enabling consumers to make mortgage payments by ACH. It is marketed as a convenient way for homeowners to schedule additional recurring principal payments on their mortgages. Consumers enroll in the service, customize their payment schedule and make payments through one or more bank accounts.
 
Cash payments. Consumers use our Quick Collect service to send guaranteed funds to businesses and government agencies from over 50,000 Western Union agent locations across the United States and Canada, using cash and, in select locations, a debit card. Increasingly, correctional institutions are using the Quick Collect service as a way for relatives to fund the commissary accounts of inmates. This service is also available on our website, and on a limited basis under the Quick Pay name at agent locations outside the United States and Canada. Consumers use our Convenience Pay service to send payments by cash or check from a smaller number of Convenience Pay agent locations primarily to utilities and telecommunication providers. We also offer Quick Cash, a cash disbursement service used by businesses and government agencies to send money to employees or individuals with whom they have accounts or other business relationships.
 
Distribution and Marketing Channels
 
Our electronic payment services are available primarily through IVR and over the Internet, while our cash-based services are available through our agent networks. Billers market our services to consumers in a number of ways, and we market our services directly to consumers using a variety of means, including advertising materials and promotional activities at our agent locations. Consumers can also participate in the Western Union Gold Card program when making cash payments to billers.
 
Industry Trends
 
The consumer-to-business payment industry has evolved with technological innovations that created new methods of processing payments from individuals to businesses. We believe that the United States is in the midst of a trend away from paper checks toward electronic payment methods accessible through multiple technologies. We believe that the market will reward those companies that are able to provide consumers with fast and reliable ways to make payments by the method and through the means of their choice. Historically, the majority of bills in the United States was paid through checks in the mail. In 1989, Western Union began offering an agent-based cash bill payment solution called “Quick Collect,” which provided consumers with a convenient, walk-in, cash-based way to pay their bills. Further innovation in the industry led to the creation of electronic options for consumer payments including telephone and online services. In a February 2005 report, Aite estimated that more than 18 billion bill payments would be made in 2005 in the United States alone.
 
The consumer-to-business payment industry outside the United States is at varying stages of development. In some countries, walk-in cash payments at a biller’s office or through a third party network are widely used, while in other countries electronic payment options are finding ready acceptance by consumers and businesses alike.
 
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Competition
 
We face robust competition in the highly-fragmented consumer-to-business payment industry. Competition in electronic payments includes financial institutions (which may offer bill-payment services in their own name or may “host” payment services operated under the names of their clients), billers offering their own or third-party services to their own customers, and third-party providers of all sizes offering services directly to consumers. In many cases, competitors specialize in a small number of industries. Competitors for cash payments include a biller’s own walk-in locations, or those provided by others, some only on a regional basis, as well as mail and courier services. There is also competition between electronic and cash-based payments methods.
 
The most significant competitive factors in this segment relate to brand recognition, convenience, variety of payment methods and price.
 
For additional details regarding our consumer-to-business segment, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined financial statements and the notes to those statements included elsewhere in this information statement.
 
Other
 
The remainder of our business units are grouped in the “Other” category, which includes money orders and prepaid services.
 
We sell Western Union branded money orders, issued by IPS, to consumers at non-bank retail locations. IPS pays us a commission based on an investment yield on the outstanding balances in the investment portfolio derived from the money orders sold. To a lesser extent, we also make money on per item fees charged for money order sales. In a money order transaction, a consumer purchases a money order from an agent. The agent selling the money order generally remits the funds collected from the consumer to IPS promptly following the sale date. Agents generally receive no commissions from us on money order sales, but rather are compensated by charging a fee to the consumer for the purchase of the money order.
 
Western Union’s prepaid services market:
 
 	•	 	a Western Union branded prepaid debit card (issued by a third party);	
 
 	•	 	a Western Union branded telephone card; and	
 
 	•	 	third-party top-up services (that, for example, allow mobile phone users to “top-up” or prepay for mobile service).	
 
The Western Union branded prepaid debit card is sold through our agent network and the Internet. Our “top-up” services allow consumers to pre-pay for mobile phone or other services, and otherwise store value with service providers that can be accessed by the consumer in the future. In each of these transactions, the consumer pays a fee that is set by us and recorded as revenue. The agent earns a fixed commission per transaction.
 
Properties and Facilities
 
As of June 30, 2006, we owned or leased 100 domestic and international properties. Following the spin-off, four of our leased properties will be subleased from First Data. Our owned and leased facilities are used for operational, sales and administrative purposes, and are all currently being utilized.

 	  	Leased
Facilities	  	Owned
Facilities	 	
United States Facilities	  	35	  	3	*	
International Facilities	  	62	  	—	 	

*	Of these facilities, two represent our corporate headquarters that will be transferred to us in connection with the spin-off.	
 
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Our United States facilities encompass approximately 825,000 square feet. Our international facilities encompass approximately 300,000 square feet, primarily for marketing, sales and management activities, and include our European shared services center in Dublin, Ireland.
 
Our owned facilities will include our corporate headquarters, located in Englewood, Colorado. We believe that our facilities are suitable and adequate for our current business; however, we periodically review our space requirements and may acquire new space to meet the needs of our businesses or consolidate and dispose of or sublet facilities which are no longer required. See “Our Relationship with First Data After the Spin-Off—Subleases.”
 
Intellectual Property
 
The Western Union brand, consisting of trademark registrations in many countries, is material to our company. The loss of the Western Union ® trademark or a diminution in the perceived quality associated with the name would harm our growth. The Vigo SM service mark and the Orlandi Valuta ® , Speedpay ® , Western Union Quick Collect ® and Paymap ® trademarks are also important to our company. We own patents and patent applications covering aspects of our processes and services, but our business is not dependent on them.
 
We have been, and in the future may be, subject to claims and suits alleging that our technology or business methods infringe patents owned by others, both in and out of the United States. Unfavorable resolution of these claims could require us to change how we deliver services, result in significant financial consequences, or both, which could adversely affect our business, financial position and results of operations.
 
Risk Management
 
Our company has a substantial credit risk management department that evaluates and monitors our credit and fraud risks. We are exposed to credit risk related to receivable balances from agents in the money transfer and money order settlement process. We also are exposed to a small amount of credit risk directly from consumer transactions particularly through our online services and electronic consumer-to-business channels, where transactions are originated through means other than cash, and therefore are subject to “chargebacks,” insufficient funds or other collection impediments. The credit risk management team performs a credit investigation before each agent signing and conducts on-going analysis throughout each relationship. As a result, our company’s losses associated with bad debts have been less than 1% of our annual revenue in each of the last three fiscal years.
 
A key component of the Western Union business model is our ability to manage risk associated with conducting financial transactions worldwide. We settle accounts with the majority of our agents in United States dollars and euros. We utilize currency exchange contracts, primarily forward contracts, to mitigate the risks associated with currency fluctuations. Limited foreign currency risk arises with respect to the agent settlement process. The foreign currency exchange risk is limited because the majority of money transfer transactions are paid within 24 hours after they are initiated and agent settlements occur in a few days in most instances.
 
International Investment
 
We expect to receive net cash proceeds on the spin-off date in connection with the settlement of the intercompany note balances with First Data classified as “Notes receivable from affiliated companies” and “Notes payable to affiliated companies” in our historical combined balance sheets. The net funding for these notes was generated through our international operations, and no provision has been made for United States federal and state income taxes on approximately $552.5 million of these foreign earnings as of December 31, 2005, as we expect to reinvest these earnings outside the United States indefinitely. We believe the investment of
 
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these proceeds over a number of years will assist us in executing on our international strategies, including expanding and diversifying global distribution and exploring new service offerings, as follows:
 
 	•	 	providing the necessary capital to expand our international bank, which has the ability to establish branches and offer money transfer and other financial services directly to consumers in each of the 25 member states of the European Union;	
 
 	•	 	providing us with the ability to acquire companies outside the United States that complement our existing businesses worldwide;	
 
 	•	 	developing new or enhancing existing software to support the expansion of our international agent network;	
 
 	•	 	expanding our international call center operations; and	
 
 	•	 	funding our operating cash requirements outside the United States.	
 
The timing of these investments will be based on specific opportunities.
 
Regulation
 
Our operations are subject to a wide range of laws and regulations enacted by the United States, states and localities and other countries. These include financial services regulations, consumer disclosure and consumer protection laws, currency control regulations, money transfer and payment instrument licensing regulations, escheat laws and laws covering consumer privacy, data protection and information security. Our services also are subject to an increasingly strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing and other illicit activity. Failure to comply with any of these requirements—by either Western Union or its agents (who are third parties, over which Western Union has limited legal and practical control)—could result in the suspension or revocation of a license or registration required to provide money transfer services, the limitation, suspension or termination of services, and/or the imposition of civil and criminal penalties, including fines. We continue to implement policies and programs and adapt our business practices and strategies to help us comply with current legal standards, as well as with new and changing legal requirements affecting particular services, or the conduct of our business in general. These programs include dedicated compliance personnel, training and monitoring programs, as well as support and guidance to our agent network on compliance programs.
 
Money Transfer and Payment Instrument Licensing and Regulation
 
In the United States, most states license money transfer services providers and issuers of payment instruments. Many states exercise authority over the operations of our services related to money transmission and the sale of payment instruments and, as part of this authority, subject us to periodic examinations. Many states require, among other things, that proceeds from the sales of payment instruments and money transfers be invested in high-quality marketable securities prior to the settlement of the transactions. These licensing laws also may cover matters such as regulatory approval of controlling shareholders, including our company, regulatory approval of agent locations and consumer forms, consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to demonstrate and maintain certain net worth levels. Many states also require money transmitters, issuers of payment instruments, and their agents to comply with federal and/or state anti-money laundering laws and regulations.
 
Our money transfer and money order services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the “BSA”) and similar state laws and regulations. In addition, certain economic and trade sanctions programs that are administered by the Treasury Department’s Office of Foreign Assets Control prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and
 
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terrorists or terrorist organizations. Through our third party agents, we provide limited services to Cuba, Syria, and Sudan pursuant to advisory opinions of, or specific authority granted under licenses from, the United States Department of the Treasury Office of Foreign Assets Control and in territories under the Palestinian Authority. Services in those areas are limited to small dollar amount money transfers in many cases only into these territories to approved individuals. The BSA, among other things, requires money transfer companies and the issuers and sellers of money orders, to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, in some cases, to collect and maintain certain information about the sender and receiver, and to maintain transaction records. States impose similar and, in some cases more stringent, requirements. These requirements also apply to our agents. The Treasury Department has interpreted these requirements to include due diligence and risk based monitoring of agents inside and outside the United States.
 
In addition, our money transfer business is subject to some form of regulation in the more than 200 countries and territories in which those services are offered. These regulations may include limitations on what types of entities may offer money transfer services, limitations on the amount of principal that can be moved into or out of a country, limitations on the number of money transfers that may be sent or received by a consumer, agreements on the rates of exchange between currencies, and laws and regulations intended to help detect and prevent money laundering and criminalize money laundering activity.
 
We have developed and are enhancing global compliance programs to monitor and address various aspects of legal and regulatory requirements and developments. Our money transfer network operates through third-party agents in most countries, and our legal and practical ability to control those agents’ compliance activities is limited. To assist in managing and monitoring money laundering risks, we have developed and continue to enhance an anti-money laundering compliance program comprised of policies, procedures, systems and internal controls. At present, we have over 200 employees in a number of our offices around the world dedicated to these efforts.
 
Government agencies both inside and outside the United States may impose new or additional rules on money transfers and sales of payment instruments affecting us or our agents, including regulations that:
 
 	•	 	prohibit transactions in, to or from certain countries, governments, nationals and individuals and entities;	
 
 	•	 	impose additional identification, reporting or recordkeeping requirements;	
 
 	•	 	limit the entities capable of providing money transfer services and/or the sale of payment instruments, or imposing additional licensing or registration requirements;	
 
 	•	 	impose minimum capital or other financial requirements;	
 
 	•	 	limit or restrict the revenue which may be generated from money transfers, including transaction fees and revenue derived from foreign exchange;	
 
 	•	 	require additional disclosures to consumers; or	
 
 	•	 	limit the number or principal amount of money transfers which may be sent to or from the jurisdiction.	
 
Escheat Regulations
 
Our company is subject to unclaimed or abandoned property (escheat) laws in the United States and abroad which require us to turn over to certain government authorities the property of others held by our company that has been unclaimed for a specified period of time. A number of our subsidiaries hold property subject to escheat laws and we have an ongoing program to comply with those laws. We are subject to audit by the states with regard to our escheatment practices.
 
In 2002, Affiliated Computer Services (“ACS”) notified First Data of its intent to audit First Data’s escheatment practices on behalf of 19 states (the “ACS States”). The ACS States subsequently increased to 44 states. The ACS States agreed to allow First Data to conduct an internal examination of its escheatment practices
 
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utilizing third party experts. First Data also entered into Voluntary Disclosure Agreements with four other states (the “VDA States”). Like the ACS States, the VDA States agreed to allow First Data to conduct its own internal review in place of an audit by the states.
 
First Data completed the majority of the internal review in December 2005. As a result of that review and in addition to amounts already recorded, Western Union recognized a $8.2 million pretax charge in the fourth quarter of 2005 for domestic and international escheatment liabilities. Portions of this charge are not scheduled to be remitted until periods beyond 2006.
 
Western Union plans to complete its internal review and discuss the results thereof with the ACS States and the VDA States in 2006. Any difference between the amounts accrued by our company and those claimed by a state or foreign jurisdiction will be reflected in the periods in which any resolutions occur.
 
Privacy and Information Security Regulations
 
Our services are subject to privacy laws and regulations of the United States, states and other countries. United States privacy laws include the federal Gramm-Leach-Bliley Act, which applies directly to a broad range of financial institutions and indirectly to companies that provide services to financial institutions. Laws in other countries include those adopted by the member states of the European Union under Directive 95/46 EC of the European Parliament and of the Council of 24 October 1995, as well as the laws of other countries. In some cases, the laws of a member state may be more restrictive than the Directive and may impose additional duties on companies. Each of these laws restricts the collection, processing, storage, use and disclosure of personal information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent use and disclosure of protected information. These laws also impose requirements for safeguarding personal information through the issuance of data security standards or guidelines. Certain state laws impose similar privacy obligations, as well as, in certain circumstances, obligations to provide notification to affected individuals, state officers and consumer reporting agencies, as well as businesses and governmental agencies that own data, of security breaches of computer databases that contain personal information.
 
In connection with governmental efforts to prevent money laundering and terrorist financing and pursuant to legal obligations and authorizations, Western Union makes information available to United States federal and state, as well as certain foreign, law enforcement agencies. In recent years, government agencies have increased their requests for such information from Western Union and other companies (both financial service providers and others), particularly in connection with efforts to prevent terrorist financing. During the same period, there has also been increased public attention to concerns about consumer privacy, accompanied by legislation and regulations intended to address issues of data protection, information security and privacy. These two policy goals—the prevention of money laundering and terrorist financing and the protection of consumer privacy—may conflict, and the law in these areas is not consistent or settled. While we believe that Western Union is compliant with its legal responsibilities, the legal, political and business environments in this area are rapidly evolving, and subsequent legislation, regulation, litigation, court rulings or other events could expose Western Union to liability and reputational damage.
 
Banking Regulation
 
Western Union International Bank operates under a banking license granted by the Austrian Financial Market Authority (“FMA”), allowing the bank to offer a range of financial services in the 25 member states of the European Union. The banking license subjects our bank to the Austrian Banking Act and the Austrian Financial Market Authority Act and regulation by the FMA. The bank also is subject to regulation, examination and supervision by the New York State Banking Department (the “Banking Department”), which has regulatory authority over our subsidiary that controls the bank, a limited liability investment company organized under Article XII of the New York Banking Law. An Agreement of Supervision with the Banking Department imposes various regulatory requirements including operational limitations, capital requirements, affiliate transaction
 
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limitations, and notice and reporting requirements. Banking Department approval is required under the Banking Law and the Agreement of Supervision prior to any change in control of the Article XII investment company.
 
Since Western Union International Bank does not, among other things, operate any banking offices in the United States and does not conduct business in the United States except as may be incidental to its activities outside the United States, our company’s affiliation with Western Union International Bank does not cause it to be subject to the provisions of the Bank Holding Company Act.
 
Other
 
Stored-value services offered by Western Union prepaid services are subject to federal and state laws and regulations related to consumer protection, licensing, escheat, money laundering, and payment of wages. These laws are evolving, unclear and sometimes inconsistent, and the extent to which these laws apply to Western Union or its consumers is in flux. We are unable to determine the impact that the clarification of these laws and their future interpretations may have on these services.
 
Legal Proceedings
 
We are party to a variety of legal proceedings that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our consolidated results of operations or financial position.
 
Employees and Labor
 
As of June 30, 2006, our businesses employed approximately 4,700 employees. Western Union has two four-year labor contracts (both expiring August 6, 2008) with the Communications Workers of America, AFL-CIO representing approximately 990 employees located primarily in Dallas, Texas; Bridgeton, Missouri and St. Charles, Missouri. Our United States based employees are not otherwise represented by any labor organization.
 
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OUR R  ELATIONSHIP WITH FIRST DATA AFTER THE SPIN-OFF
 
General
 
Immediately prior to the spin-off, we will be a wholly-owned subsidiary of First Data. After the spin-off, First Data will not have any ownership interest in our common stock, and we will be an independent, publicly traded company.
 
We will enter into agreements with First Data prior to the spin-off to govern the terms of the spin-off and to define our ongoing relationship following the spin-off, allocating responsibility for obligations arising before and after the spin-off, including, obligations with respect to liabilities relating to First Data’s business and to Western Union’s business and obligations with respect to our employees, certain transition services and taxes. We will enter into these agreements with First Data while we are still a wholly-owned subsidiary of First Data and certain terms of these agreements are not necessarily the same as could have been obtained from an independent third party.
 
The following descriptions are summaries of the terms of the agreements we believe to be material. We encourage you to read, in their entirety, each of the agreements when they become available. The terms of these agreements have not yet been finalized; changes, some of which may be material, may be made prior to the spin-off.
 
Transactions Occurring Prior to Entry into Separation and Distribution Agreement
 
Two days prior to the distribution date, FFMC will declare and pay to First Data, as its sole stockholder, a dividend in the form of a promissory note of approximately $[•] billion. Simultaneously with the payment of the dividend by FFMC, First Data will contribute to FFMC the outstanding capital stock of the subsidiary of First Data that owns Vigo.
 
One day prior to the distribution date, FFMC will declare a dividend to First Data of the outstanding capital stock of First Data Commercial Services Holdings, Inc., or FDCS, with a record date as of the close of business on the date it is declared and a payment date of the distribution date. As described below, pursuant to the separation and distribution agreement, prior to the payment of such dividend, FFMC will contribute to FDCS the outstanding capital stock of CESI Holdings, Inc. and Telecheck International, Inc., and other subsidiaries currently owned by FFMC that operate businesses not a part of the money transfer and consumer payments businesses.
 
Separation and Distribution Agreement
 
The separation and distribution agreement will provide, among other things, for the principal corporate transactions required to effect the contribution by First Data of the subsidiaries that operate our businesses, the distribution of our common stock to the holders of record of First Data common stock and certain other agreements governing our relationship with First Data after the spin-off.
 
The Recapitalization, Contribution and Separation. The separation and distribution agreement is expected to provide that, subject to the terms and conditions in the separation and distribution agreement,
 
 	•	 	First Data will increase the authorized number of shares of our common stock to 2,000,000,000;	
 
 	•	 	FFMC will contribute to FDCS the outstanding capital stock of CESI Holdings, Inc. and Telecheck International, Inc. and other subsidiaries currently owned by FFMC that operate businesses not a part of the money transfer and consumer payments business;	
 
 	•	 	FFMC will distribute to First Data the outstanding capital stock of FDCS and we will transfer to First Data other assets related to the businesses of First Data that are not a part of the money transfer and consumer payments businesses;	
 
 	•	 	First Data will contribute to us the outstanding capital stock of (i) FFMC, (ii) Paymap, (iii) Western Union Services, Inc. and (iv) ECG, as well as certain patents and real estate and First Data’s interest in one of our agents;	
 
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 	•	 	in consideration for the contribution, we will transfer to First Data (i) approximately $[•] million in cash, (ii) the exchange notes with an aggregate principal amount of at least $800 million and (iii) shares of our common stock sufficient to effect the distribution;	
 
 	•	 	First Data will use its reasonable best efforts to have us released from all financial instruments that are primarily for its benefit and on which we are primarily or secondarily liable and we will use our reasonable best efforts to have First Data released from all financial instruments that are primarily for our benefit and on which First Data is primarily or secondarily liable;	
 
 	•	 	First Data will pay us $778.8 million to repay intercompany notes and related accrued interest of $32.4 million owed by First Data to us;	
 
 	•	 	We will pay First Data $52.2 million to repay intercompany notes and related accrued interest of $2.2 million owed by us to First Data;	
 
 	•	 	We will pay First Data $16.8 million to settle certain foreign currency swap arrangements with First Data related to certain notes receivable from affiliates;	
 
 	•	 	We will forgive $153.8 million of intercompany balances owed by First Data to us, and an affiliate of First Data will forgive an intercompany note owed by us to that affiliate of $11.3 million, which collectively will be treated as a net dividend to First Data for accounting and tax purposes; and	
 
 	•	 	First Data will use the cash and debt securities received from The Western Union Company as consideration for the contribution to pay creditors of First Data in full or partial satisfaction of amounts owed by First Data that do not relate to Western Union’s operations.	
 
The share numbers are based on First Data share numbers as of June 30, 2006, and the dollar and settlement amounts are based on our balances as of June 30, 2006.
 
First Data’s contribution to us of the subsidiaries that operate our business and related assets will occur prior to the distribution of our common stock to First Data’s stockholders. The contribution by First Data will be made on an “as is, where is” basis without any representations or warranties, and we will bear the economic and legal risks of the contribution. First Data generally will not retain any of the liabilities of the subsidiaries contributed to us or liabilities associated with the related assets contributed to us and we and the contributed subsidiaries will agree to perform and fulfill all of the liabilities arising out of the operation of the money transfer and consumer payments businesses. Similarly, our transfer to First Data of CESI Holdings and Telecheck and other assets not a part of the money transfer and consumer payments businesses will occur prior to the contribution and the distribution of our common stock to First Data’s stockholders. The transfer to First Data will be made on an “as is, where is” basis without any representations or warranties, and First Data will bear the economic and legal risks of the transfer. We generally will not retain any of the liabilities of the subsidiaries transferred to First Data or liabilities associated with other assets transferred to First Data and First Data and those subsidiaries will agree to perform and fulfill all of the liabilities arising out of the operation of their respective businesses.
 
The Distribution. First Data has reserved sole and absolute discretion to determine whether to proceed with the distribution of our common stock to First Data’s stockholders, the timing of the distribution and whether to alter any and all terms of the distribution at any time prior to the distribution date. The distribution also is subject to the satisfaction of certain conditions including that,
 
 	•	 	the SEC has declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act and no stop order relating to our Form 10 registration statement is in effect;	
 
 	•	 	the SEC has declared effective under the Securities Act registration statement of Form S-1 registering the exchange notes to be sold by the investment banks, and no stop order relating to the registration statement is in effect;	
 
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 	•	 	the SEC has declared effective under the Securities Act the stock options registration statement, and no stop order relating to the stock options registration statement is in effect;	
 
 	•	 	First Data and Western Union have received all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of foreign jurisdictions in connection with the distribution;	
 
 	•	 	First Data and Western Union have received all material permits, registrations, clearances and consents from governmental authorities and third persons necessary to effect the spin-off and to permit the operation of our business thereafter;	
 
 	•	 	First Data has received a private letter ruling from the Internal Revenue Service (which has not been revoked or modified in any material respect), and an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in each case in form and substance satisfactory to First Data, to the effect that, among other things, the spin-off (including certain related transactions) will be tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code;	
 
 	•	 	the New York Stock Exchange has approved our common stock for listing, subject to official notice of issuance;	
 
 	•	 	our subsidiary, FFMC, has paid a dividend to First Data in the form of a promissory note in an aggregate principal amount of approximately $[•] billion, which dividend is expected to be paid two days prior to the distribution date;	
 
 	•	 	simultaneously with the payment of such dividend by FFMC, First Data has transferred to FFMC the capital stock of the subsidiary of First Data that owns Vigo;	
 
 	•	 	First Data has completed the contribution to us of the other subsidiaries that own and/or operate our money transfer and consumer payments businesses and related assets and we have assumed the related liabilities and transferred to First Data (i) approximately $[•] million in cash, (ii) the exchange notes with an aggregate principal amount of at least $800 million and (iii) shares of our common stock sufficient to effect the distribution;	
 
 	•	 	we have transferred to First Data the subsidiaries and related assets we own that are not part of our money transfer and consumer payments businesses and First Data has assumed the liabilities associated with such related assets;	
 
 	•	 	an independent firm acceptable to First Data, in its sole and absolute discretion, has delivered one or more opinions to the board of directors of each of First Data and Western Union confirming the solvency and financial viability of Western Union and First Data, which opinions will be in form and substance satisfactory to First Data, in its sole and absolute discretion, and shall not have been withdrawn or rescinded;	
 
 	•	 	no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the spin-off or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the separation and distribution agreement, is in effect;	
 
 	•	 	First Data and Western Union have each received credit ratings from the credit rating agencies that are satisfactory to First Data in its sole and absolute discretion; and	
 
 	•	 	no other events or developments shall have occurred that, in the judgment of the board of directors of First Data, in its sole and absolute discretion, would result in the spin-off having a material adverse effect on First Data or its stockholders.	
 
Even if all of the conditions to the distribution are satisfied, First Data has the right to amend or terminate the separation and distribution agreement and the related transactions at any time prior to the spin-off. Although
 
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First Data can waive any condition to the distribution, First Data has informed us that its board of directors has no intention to proceed with the distribution unless each condition is satisfied.
 
Releases, Allocation of Liabilities Indemnification and Insurance Matters . The separation and distribution agreement provides for a full and complete release and discharge of all liabilities existing or arising from or based on facts existing prior to the spin-off, between or among us or any of our affiliates, on the one hand, and First Data or any of its affiliates (other than us), on the other hand, except as set forth in the separation and distribution agreement.
 
We will be liable for and agree to perform all liabilities with respect to our business, which we refer to as the “Western Union liabilities.” Those liabilities will include, (i) all liabilities of Western Union and its subsidiaries to the extent based upon or arising out of our money transfer and consumer payments businesses, (ii) all liabilities of First Data and its subsidiaries to the extent based upon or arising out of our money transfer and consumer payments businesses or businesses we have disposed of, (iii) all liabilities based upon or arising out of financial instruments of Western Union and its subsidiaries, (iv) all outstanding liabilities on our unaudited pro forma combined balance sheet and (v) all liabilities that are of a nature or type that would have resulted in such liabilities being included on a consolidated balance sheet of Western Union as of the time of the spin-off.
 
First Data will be liable for and agree to perform all liabilities with respect to its business, which we refer to as the “First Data liabilities.” Those liabilities will include, (i) all liabilities of First Data and its subsidiaries to the extent based upon or arising out of the First Data retained business, (ii) all liabilities of Western Union and its subsidiaries to the extent based upon or arising out of the First Data retained business or businesses First Data has disposed of, (iii) all liabilities based upon or arising out of financial instruments of First Data and its subsidiaries, (iv) all outstanding liabilities on the First Data unaudited consolidated balance sheet as of June 30, 2006, other than Western Union liabilities, and (v) all liabilities that are of a nature or type that would have resulted in such liabilities being included on a consolidated balance sheet of First Data as of the time of the spin-off, other than Western Union liabilities.
 
In addition, the separation and distribution agreement will provide for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of First Data’s retained businesses with First Data. Specifically, subject to certain exceptions set forth in the separation and distribution agreement, we have agreed to assume liability for, and to indemnify and hold harmless First Data, its affiliates and its directors, officers and employees against, certain liabilities relating to our business and the spin-off, including all liabilities relating to, arising out of or resulting from:
 
 	•	 	the failure by Western Union or any other person to pay, perform or otherwise promptly discharge any Western Union liability;	
 
 	•	 	any Western Union liability;	
 
 	•	 	our business (including any businesses or assets that have been divested prior to the spin-off or thereafter) as conducted on, at any time prior to or at any time after the spin-off;	
 
 	•	 	except to the extent provided in the separation and distribution agreement, any claim that the information included in our registration statement on Form 10 or this information statement, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;	
 
 	•	 	except to the extent provided in the separation and distribution agreement, any claim that the information included in the registration statement on Form S-1 registering the exchange notes to be sold by the investment banks, or the prospectus forming a part thereof, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statement therein, in light of the circumstances under which they were made, not misleading;	
 
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 	•	 	except to the extent provided in the separation and distribution agreement, any claim that the information included in the stock options registration statement, or the prospectus forming a part thereof, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;	
 
 	•	 	the use by us after the spin-off of the name First Data or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to First Data;	
 
 	•	 	the breach by us of any covenant or agreement set forth in any agreement entered into in connection with the spin-off; and	
 
 	•	 	our financial instruments.	
 
First Data has agreed to indemnify and hold harmless us, our affiliates and our directors, officers and employees from and against all liabilities relating to, arising out of or resulting from:
 
 	•	 	the failure by First Data or any other person to pay, perform or otherwise promptly discharge any First Data liability;	
 
 	•	 	any First Data liability;	
 
 	•	 	First Data’s retained business (including any businesses or assets that have been divested prior to the spin-off, or thereafter) as conducted on, at any time prior to or at any time after the spin-off;	
 
 	•	 	solely with respect to information identified in the schedules to the separation and distribution agreement as being supplied by or the responsibility of First Data, any claim that the information included in our registration statement on Form 10 or this information statement, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;	
 
 	•	 	solely with respect to information identified in the schedules to the separation and distribution agreement as being supplied by or the responsibility of First Data, any claim that the information included in the registration statement on Form S-l registering the exchange notes to be sold by the investment banks, or the prospectus forming a part thereof, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;	
 
 	•	 	solely with respect to information identified in the schedules to the separation and distribution agreement as being supplied by or the responsibility of First Data, any claim that the information included in the stock options registration statement, or the prospectus forming a part thereof, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;	
 
 	•	 	the use by First Data after the spin-off of the name Western Union or any variation thereof, or other trademarks, trade names, logos or identifiers using any of such names or otherwise owned by or licensed to Western Union;	
 
 	•	 	the breach by First Data of any covenant or agreement set forth in any agreement entered into in connection with the spin-off; and	
 
 	•	 	First Data’s financial instruments.	
 
The separation and distribution agreement also will establish procedures with respect to claims subject to indemnification and related matters. Indemnification with respect to taxes and employee benefits will be governed by the tax allocation agreement and the employee matters agreement, respectively.
 
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The separation and distribution agreement will provide for the allocation of benefits between First Data and us under existing insurance policies following the spin-off for occurrences prior to the spin-off and will set forth procedures for the administration of insured claims.
 
Termination . The separation and distribution agreement will provide that it may be terminated and the spin-off may be modified or abandoned at any time prior to the spin-off in the sole discretion of First Data without our approval or the approval of First Data’s stockholders. In the event of a termination of the separation and distribution agreement, no party will have any liability of any kind to any other party or any other person. After the spin-off, the agreement may not be terminated except by an agreement in writing signed by both First Data and us.
 
Expenses . Except as provided in the separation and distribution agreement or in any related agreement, each of First Data and Western Union will pay all third-party fees, costs and expenses paid or incurred by it in connection with the preparation, execution, delivery and implementation of the separation and distribution agreement, any related agreement, our registration statement on Form 10, the registration statement on Form S-1 registering the exchange notes, the stock options registration statement and the distribution and the completion of the transactions contemplated thereby, provided that First Data generally will pay any non-recurring third-party fees, costs and expenses in connection with the foregoing incurred prior to the spin-off that First Data deems necessary to effect the spin-off, such as investment banker fees, outside legal and accounting fees relating to the spin-off, office move costs, costs to separate information systems and temporary consulting costs, and Western Union generally will pay any non-recurring third-party fees, costs and expenses in connection with the foregoing incurred prior to the spin-off that are expected to benefit Western Union following the spin-off in the ordinary course of business, such as recruiting and relocation expenses associated with hiring key senior management positions new to Western Union, other employee compensation expenses and temporary labor used to develop ongoing processes. Except as provided in the separation and distribution agreement or any related agreement, all fees, costs and expenses incurred by a party after the spin-off will be borne by that party.
 
Dispute Resolution . The separation and distribution agreement contains provisions that govern, except as otherwise provided in any related agreement, the resolution of disputes, controversies or claims that may arise between us and First Data. These provisions contemplate that efforts will be made to resolve disputes, controversies and claims by escalation of the matter to senior management or other mutually agreed representatives of us and First Data. Disputes remaining unresolved are then to be submitted to mandatory mediation. If such efforts are not successful, any party may submit the dispute, controversy or claim to mandatory, binding arbitration, subject to the provisions of the separation and distribution agreement. The separation and distribution agreement contains procedures for the selection of one or more arbitrators of the dispute, controversy or claim and for the conduct of the arbitration hearing, including limitations on discovery rights of the parties. These procedures are intended to produce an expeditious resolution of any such dispute, controversy or claim.
 
Employee Non Solicitation . Western Union and First Data will each agree, subject to certain exceptions, that for a period of six months following the spin-off, it will not solicit for employment any employee of the other party.
 
Transition Services Agreement
 
We will enter into a transition services agreement with First Data pursuant to which First Data and Western Union will provide each other with a variety of administrative services for a period of time following the spin-off. Among the principal services First Data will provide to us are:
 
 	•	 	data center hosting;	
 
 	•	 	disaster recovery, monitoring services;	
 
 	•	 	call center support, network connectivity, system support (e.g., financial, legal, human resources, operational, portfolio management and properties systems);	
 
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 	•	 	information security system support;	
 
 	•	 	payroll;	
 
 	•	 	benefits; and	
 
 	•	 	human resources.	
 
Among the principal services we will provide to First Data are:
 
 	•	 	call center support;	
 
 	•	 	software development and support; and	
 
 	•	 	network connectivity.	
 
Western Union and First Data will agree to make each service available to the other on an as-needed basis for a period of time not to exceed one year following the date the spin-off is completed, or such shorter periods as may be provided in the transition services agreement. We expect that the costs of these services previously allocated by First Data will be reflective of amounts charged going forward. The total estimated costs we expect to incur for these services is approximately $15 million which, following the spin-off, will be charged based on either cost plus or local market conditions for comparable services.
 
The transition services agreement will provide that either party may terminate the provision of a particular service it is being provided only upon obtaining the prior written consent of the other party, which consent may not be unreasonably withheld or delayed.
 
Employee Matters Agreement
 
First Data and Western Union will enter into an employee matters agreement, providing for their respective obligations to employees and former employees who are or were associated with Western Union (including those employees who transfer employment from First Data to Western Union immediately prior to the spin-off) and for other employment and employee benefits matters. The employee matters agreement may also provide for sharing of specific employee and former employee information to enable First Data and Western Union to comply with their respective obligations. The terms described below are based on our current expectations but are subject to approval by the First Data compensation and benefits committee.
 
Treatment of Retirement and Welfare Plans . Western Union will establish a defined contribution plan for the benefit of eligible non-union employees of Western Union in the United States (including employees transferred to Western Union and its subsidiaries prior to the spin-off). Subject to any adjustments required by applicable law, First Data and Western Union presently intend that the assets and liabilities of the First Data Corporation Incentive Savings Plan attributable to transferring employees be transferred to and assumed by the defined contribution plan established by Western Union. Eligible union employees will continue to participate in the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Union Employees after the spin-off. Western Union Financial Services, Inc., or “Western Union Financial Services,” will also continue to sponsor the frozen pension plans for which it has been the plan sponsor for periods prior to the spin-off. Western Union’s retirement plans will grant credit for service which was recognized under the First Data plans for certain purposes.
 
For the period beginning on the date of completion of the spin-off and ending on December 31, 2006, eligible Western Union employees will continue to participate in the First Data welfare plans. Effective as of January 1, 2007, Western Union will establish welfare plans for the benefit of its eligible employees and their respective eligible dependents. Following the date of completion of the spin-off, Western Union Financial Services will continue to be the plan sponsor of the Western Union Financial Services, Inc. Health and Welfare Benefit Plan.
 
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In several locations outside the United States, it likely will not be feasible to establish such retirement or welfare plans due to the small number of employees at these locations. In such situations, Western Union will establish alternative compensation and/or benefit programs to comply with its obligations to affected employees.
 
Treatment of Stock Options . The employee matters agreement will provide that each outstanding option to purchase First Data common stock held by a person who is or will be an employee or director of Western Union immediately after the spin-off will be replaced with a substitute option to purchase Western Union common stock. The substitute option will preserve the intrinsic value of the option and the ratio of the exercise price to the fair market value of the stock by adjusting the number of shares purchasable and the exercise price, based on a comparison of the trading price of First Data common stock prior to the spin-off, which includes the value of Western Union, and the trading price of Western Union common stock immediately after the spin-off. The substitute option will take into account all employment with both First Data and Western Union for purposes of determining when the option becomes exercisable and when it terminates. All other terms of the substitute option will be the same as the First Data option. Fractional shares underlying substitute options will be adjusted or compensated by First Data as appropriate in its judgment. As of June 30, 2006, there were outstanding options to purchase 8.1 million shares of First Data common stock that would be replaced in this manner.
 
The employee matters agreement will provide that outstanding options to purchase First Data common stock held by current and former employees and directors of First Data who do not become employees or directors of Western Union after the spin-off will be replaced with both an adjusted First Data option and a substitute Western Union option. This replacement will be implemented in a manner such that immediately following the spin-off (i) the number of shares subject to the adjusted First Data option will be equal to the number of shares subject to the option prior to the spin-off, (ii) the number of shares subject to the substitute Western Union stock option will be equal to the number of shares of Western Union common stock that the option holder would have received in the spin-off had the First Data shares subject to the option represented outstanding shares of First Data common stock (i.e., a ratio of one share of Western Union common stock for each share of First Data common stock), and (iii) the per share option exercise price of the original First Data stock option will be proportionally allocated between the two different stock options based upon the relative per share trading prices of First Data and Western Union stock immediately following the spin-off. Both options, when combined, will preserve the intrinsic value of the original First Data option, and each will preserve the ratio of the exercise price to the fair market value of the stock subject to the option. The substitute Western Union option will take into account all employment with First Data for purposes of determining when the option becomes exercisable and when it terminates. All other terms of the substitute option will be the same as the current First Data option. Fractional shares will be adjusted or compensated by First Data as appropriate in its judgment. As of June 30, 2006, there were outstanding options to purchase 54.1 million shares of First Data common stock that would be replaced in this manner.
 
Treatment of Restricted Stock . The employee matters agreement will provide that each holder of a First Data restricted stock award that is outstanding at the time of the spin-off will receive the distribution of Western Union common stock in the form of restricted stock. The First Data restricted stock awards of persons who are or will be employees or directors of Western Union immediately after the spin-off will be replaced with substitute Western Union restricted stock awards. The number of substitute shares of Western Union restricted stock will be adjusted to preserve the intrinsic value of the First Data restricted stock award. These restricted stock awards will be subject to the same vesting conditions as the First Data restricted stock award. If any shares of Western Union restricted stock are forfeited by the holder, whether a current or former Western Union employee or a current or former First Data employee, the shares will revert to Western Union. Similarly, if any shares of First Data restricted stock are forfeited by the holder the shares will revert to First Data. In addition, to the extent applicable and permitted by law, for both groups of employees, any noncompetition and other restrictive covenants will apply for the benefit of both Western Union and First Data.
 
Treatment of Restricted Stock Units . The employee matters agreement will provide that each outstanding First Data restricted stock unit held by a person who is or will be an employee or director of Western Union immediately after the spin-off will be cancelled at the time of the spin-off and Western Union will issue
 
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replacement Western Union restricted stock units that immediately following the spin-off have the same economic value as of the spin-off date as the cancelled First Data restricted stock units. The employee matters agreement will provide that each outstanding First Data restricted stock unit held by a person who was or is an employee or director of First Data prior to the spin-off (and does not become an employee or director of Western Union at the time of the spin-off) will be adjusted at the time of the spin-off to preserve the intrinsic value of the original First Data restricted stock units by adjusting the number of restricted stock units based on a comparison of the trading price of First Data common stock prior to the spin-off, which includes the value of Western Union, and the trading price of Western Union common stock after the spin-off. The substitute restricted stock units will take into account all employment with both First Data and Western Union for purposes of determining when the restricted stock units vest.
 
The spin-off will not constitute a change in control for purposes of the First Data equity plans, and therefore no vesting of awards will occur as a result of the spin-off.
 
Western Union will be entitled to claim all tax deductions for compensation arising after the spin-off from the exercise of substitute Western Union options, the vesting of Western Union restricted stock or the vesting of restricted stock units held by current or former Western Union employees, and First Data will not claim any such deduction. First Data will be entitled to claim all tax deductions for compensation arising after the spin-off from the exercise of adjusted First Data options or Western Union options, the vesting of First Data restricted stock or Western Union restricted stock or the vesting of First Data restricted stock units or Western Union restricted stock units held by current or former First Data employees, and Western Union will not claim any such deduction.
 
Tax Allocation Agreement
 
We will enter into a tax allocation agreement with First Data setting forth the rights and obligations of First Data and us with respect to:
 
 	•	 	taxes imposed on our respective businesses both prior to and after the spin-off, which we refer to as “General Taxes”; and	
 
 	•	 	taxes and other liabilities that could be imposed in connection with the spin-off (and certain related transactions) if such transactions do not qualify for tax-free treatment under the Internal Revenue Code, which we refer to as “Restructuring Taxes.”	
 
Under the terms of the tax allocation agreement, we will be required to indemnify First Data for taxes attributable to us with respect to periods before the spin-off, adjusted to reflect the results of any audit (including any adjustments with respect to taxes associated with our foreign business that is the subject of the 2003 legal restructuring and the APA discussions with the Internal Revenue Service referred to under “Risk Factors—Risks Relating to the Spin-Off—Our separation from First Data could have negative consequences on our effective tax rate”). In the case of taxes computed on a consolidated, combined or unitary basis, the portion of the taxes attributable to us will be determined under the tax allocation agreement, taking into account any intergroup adjustments. First Data will provide a similar indemnity to us with respect to taxes attributable to it with respect to periods before the spin-off and generally will compensate us for certain federal income tax benefits that it realizes that are attributable to us.
 
First Data will be liable for all Restructuring Taxes, except Restructuring Taxes resulting from actions taken by or with respect to us, one of our affiliates, or any person that, after the spin-off, is an affiliate thereof. If any Restructuring Taxes are attributable to the actions of both parties and either party’s actions alone would not have resulted in the imposition of such Restructuring Taxes, then each party will be liable for the proportional share of such Restructuring Taxes caused by the party’s actions.
 
First Data will prepare and file the consolidated federal and applicable combined or unitary state and local income tax returns in which we or one of our affiliates, on the one hand, and First Data or one of its affiliates, on
 
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the other hand, are included. Tax controversies generally will be controlled by the party bearing economic responsibility (directly or through indemnification) for the underlying tax liability, subject, in certain cases, to certain rights retained by the other party to protect its interests where appropriate.
 
Money Order Agreement
 
Currently, we manage the consumer-facing aspects of our money order business, including managing the agents who sell the Western Union ® branded money orders that are issued by IPS. IPS also conducts the First Data ® official check and financial institution money order businesses. Following the spin-off, IPS will remain a subsidiary of First Data; however, in connection with the spin-off we will enter into an agreement with IPS that will permit us to continue to conduct our money order business. In general, under this arrangement, IPS will continue to issue the money orders used in, and collect the revenue generated by, selling Western Union branded money orders, and will continue to manage the investment portfolio consisting of the proceeds from the sale of money orders that are held until the money orders are cashed and will perform the processing and clearing services necessary for payment of the money orders. Western Union will provide a number of services, including product management, sales, marketing and relationship management, supply management (i.e., the purchase and distribution of the paper on which the money orders are printed), consumer and agent support, distribution and maintenance of POS equipment, data processing and programming. For these services, IPS will agree to pay us a fee at market based rates based on the outstanding balances in the investment portfolio derived from the money orders sold, subject to reduction based on the size of the investment portfolio.
 
Patent Ownership Agreement
 
We will enter into a patent ownership agreement with First Data which will govern the ownership of and rights relating to certain patents. Under the patent ownership agreement, (i) First Data will transfer to Western Union all right, title and interest in certain specified patents, including the right to sue for past infringement, (ii) First Data will retain ownership of certain other patents and (iii) certain other patents will be jointly owned by First Data and Western Union. First Data and Western Union will each grant to the other immunity from infringement claims for the patents owned by that party. Patents that are jointly owned by First Data and Western Union will be designated as controlled by either First Data or Western Union. Except as provided in the patent ownership agreement, each party will have the exclusive right to grant licenses to the patents controlled by that party, to sue third parties for infringement of those patents and to prosecute and maintain those patents.
 
Other Spin-Off Agreements
 
In addition to the separation related agreements, Western Union and First Data will also enter into a number of commercial service agreements in connection with the spin-off. We expect that the costs of the services previously allocated by First Data will be reflective of amounts charged going forward under the agreements pursuant to which First Data or its subsidiaries will provide services to us. The annual estimated costs we expect to incur for these services is approximately $13 million which, following the spin-off, will be charged based on either cost plus or local market conditions for comparable services.
 
Output Services Agreement . Under this agreement, First Data Resources Inc., a First Data subsidiary, will produce and mail cards and other material on behalf of Western Union. This agreement is expected to have a term of three years.
 
Remittance Processing Agreement s. Under two agreements, First Data will provide check printing services to Speedpay and remittance processing and check clearing for Western Union. Each of these agreements is expected to have a term of one year.
 
Check Clearing Agreement . Under this agreement, IPS, a First Data subsidiary, will provide check clearing and processing services, as well as lockbox services, to support our money transfer checks and other items. This agreement is expected to have a term of five years.
 
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POS Deployment Agreement . Under this agreement, TASQ Technology, Inc., a First Data subsidiary, will deploy and provide maintenance services for the FDX-400 ® automated transaction terminals used in certain Western Union businesses. This agreement is expected to have a term of three years.
 
Voice Services Agreements. Under two agreements First Data Voice Services, a First Data subsidiary, will provide interactive voice response support for the Western Union call centers located in the United States and develop and provide interactive voice response maintenance services for Western Union. These agreements are expected to have a term of two years.
 
Transaction Authorization Agreement . Under this agreement, TeleCheck Services, Inc., a First Data subsidiary, will provide transaction validation services for Western Union Money Transfer ® and consumer payment transactions initiated over the Internet, by telephone or by any other method that does not involve a physical location, referred to as “card not present” transactions. This agreement is expected to have a term of three years.
 
WUIB Data Center Agreement . Under this agreement, First Data Austria, GmbH, a First Data subsidiary, will host and operate the Western Union International Bank banking software in its data center. This agreement is expected to have a term ending in December 2012.
 
Payment Services Agreement . Our Convenience Pay service is currently offered jointly through Western Union and IPS. Under this agreement Western Union Financial Services, Inc. will assume responsibility for, and perform IPS’s obligations under, contracts with billers. This agreement is expected to have a term of six years.
 
Processing Services Agreement. Under this agreement, IPS, a First Data subsidiary, will provide check production, lockbox and escheatment services for Paymap. The agreement is expected to have a term of four years.
 
Risk Management Workstation Agreement. Under this agreement, First Data Merchant Services Corporation, a First Data subsidiary, will provide access, support and development services to Western Union related to a First Data risk management application. The agreement is expected to have a term of three years.
 
Virtual Application Development Agreement. Under this agreement, First Data will provide software development services to complete development of a virtual application system for Western Union. The agreement is expected to have a term of one year.
 
Call Center Services Agreement. Under this agreement, First Data International will provide call center services to Western Union for its loyalty card program in Europe. The agreement is expected to have a term of one year.
 
Quick Collect Processing Services Agreement . Under this agreement, Western Union will provide processing services to EFS Transportation Services, Inc., a First Data subsidiary. The agreement is expected to have a term of one year.
 
Payroll Card Services Agreement. Under this agreement, Money Network, LLC, a joint venture majority owned by First Data, will provide payroll card services to Western Union. This agreement is expected to have a term of three years.
 
Existing Agreements
 
In addition to the commercial service agreements we expect to enter into with First Data in connection with the spin-off, we have several existing agreements with First Data that we expect to continue following the spin-off. The material terms of those agreements are described below.
 
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Agreements with First Data as Service Provider
 
Consumer Identification Agreements. Under these agreements, entered into as of April 1, 1997, First Data Solutions, LLC, a First Data subsidiary, makes available consumer identification validation services to Western Union for its call centers. These agreements expire on April 1, 2007, unless renewed.
 
Suntrust Merchant Processing Agreement . Under this agreement, entered into as of August 2000, Suntrust Merchant Services, LLC, a joint venture in which First Data is a member, provides merchant processing services for E Commerce Group’s electronic and consumer payment transactions. This agreement expires annually on the anniversary of the effective date, unless renewed.
 
Chase Merchant Processing Agreement . Under this agreement, entered into on or about September 2000, Chase Paymentech Solutions, LLC, a joint venture in which First Data is a member, provides merchant processing services for ECG’s electronic and consumer payment transactions. This agreement expires annually on the anniversary of the effective date, unless renewed.
 
Chase Merchant Processing Agreement for Westernunion.com. Under this agreement, entered into as of August 2002, Chase Paymentech Solutions, LLC provides merchant processing services for money transfer and consumer payment transactions made through westernunion.com. This agreement expires in August 2007, unless renewed.
 
Payer Authentication Agreement . Under this agreement, entered into as of December 1, 2004, Chase Paymentech Solutions, LLC will provide payer authentication services for “card not present” transactions. The term of this agreement is month to month.
 
Chase Multicurrency Processing Agreement. Under this agreement, entered into as of October 2005, Chase Paymentech Solutions, LLC provides multicurrency processing services. This agreement expires in October 2008, unless renewed.
 
PIN-less Debit Sponsorship Agreement . Under this agreement, entered into as of June 5, 2003, First Financial Bank, a First Data subsidiary, provides PIN-less debit sponsorship services to Western Union. This agreement may be terminated by either party on 30 days notice.
 
Card Sponsorship Agreement . Under this agreement, entered into as of March 11, 1999, First Financial Bank provides card sponsorship services to Western Union. This agreement continues in effect from year to year unless terminated by either party upon 180 days notice.
 
Taxware Services Agreement . Under this agreement, Taxware, LP, a joint venture in which First Data is a majority owner, provides tax calculation services at the point-of-sale for Western Union. The agreement expires in December 2006, unless renewed. In connection with the spin-off, this agreement is expected to be amended to add additional software to the scope of the agreement.
 
Agreement with Western Union as Service Provider
 
Quick Collect Processing Services Agreement . Under this agreement, entered into as of February 28, 2006, Western Union provides processing services as a subcontractor to First Data for cash and Internet transactions for California child support services. The agreement has a term ending in December 2009, unless renewed.
 
Subleases
 
First Data and Western Union expect to continue following the spin-off or enter into agreements with respect to the lease or sublease of certain properties to the other. All subleases, the majority of which are subject
 
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to renewal within the next two years, will be priced at levels reflecting either market rates or the pro rata share of square footage utilized. The locations of these leases or subleases are as follows:
 
Leases or Subleases with First Data as Landlord or Sublandlord
 
First Data will lease or sublease property to Western Union in Atlanta, Georgia; Hunt Valley, Maryland; Auckland, New Zealand; and Dublin, Ireland.
 
Leases or Subleases with Western Union as Landlord or Sublandlord
 
Western Union will lease or sublease property to First Data in Cerritos, California; San Francisco, California; Englewood, Colorado; Hollywood, Florida; Alpharetta, Georgia; Plano, Texas; Paris, France; Mumbai, India; and Johannesburg, South Africa.
 
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 OUR MANAGEMENT
 
Our Directors and Executive Officers
 
We expect that our board of directors following the spin-off will be comprised of seven directors, at least a majority of whom will be considered independent under the independence requirements of the New York Stock Exchange.
 
Set forth below is information concerning those persons that we expect will become our directors and executive officers as of the distribution date. Our board of directors will be divided into three classes. Each director will serve for a term expiring at the annual meeting of stockholders in the year indicated below. For more information, see “Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-Laws.”

Name	  	Age	  	Position	  	Term as
Director	
Christina A. Gold	  	58	  	Chief Executive Officer and Director	  		
Richard Badler	  	55	  	Executive Vice President, Corporate Communications and Public
Affairs	  		
David Barnes	  	45	  	Executive Vice President, Finance and Strategic Development	  		
Guy A. Battista	  	58	  	Executive Vice President and President of Western Union Financial
Services, Inc.	  		
Royal Cole III	  	45	  	Executive Vice President and General Manager, Western Union
Payment Services	  		
Hikmet Ersek	  	46	  	Executive Vice President, Europe/Middle East/Africa/South Asia	  		
Robin Heller	  	41	  	Executive Vice President, Operations and IT	  		
Ian Marsh	  	53	  	Executive Vice President and Managing Director, Asia Pacific Region	  		
Scott Scheirman	  	43	  	Executive Vice President and Chief Financial Officer	  		
David Schlapbach	  	47	  	General Counsel and Secretary	  		
William D. Thomas	  	54	  	President of The Americas	  		
Grover Wray	  	45	  	Executive Vice President of Human Resources	  		
Jack M. Greenberg	  	63	  	Non-Executive Chairman of the Board of Directors	  		
Dinyar S. Devitre	  	59	  	Director	  		
Betsy D. Holden	  	50	  	Director	  		
Alan J. Lacy	  	52	  	Director	  		
Roberto G. Mendoza	  	60	  	Director	  		
Michael A. Miles	  	44	  	Director	  		
 
Christina A. Gold will be our Chief Executive Officer and one of our directors. Prior to the spin-off, she was a Senior Executive Vice President of First Data and President of Western Union from May 2002 to 2006. From October 1999 to May 2002 she was Chairman, President and Chief Executive Officer of Excel Communications, Inc. Ms. Gold served as President and Chief Executive Officer of The Beaconsfield Group from March 1998 to October 1999. In 1969 she joined Avon Products, Inc., serving as President and Chief Executive Officer of Avon Canada from 1989 to 1993 and President of Avon North America from 1993 to 1997 and Executive Vice President of Global Development from 1997 to 1998. Ms. Gold is a Director of ITT Industries, Inc., Torstar Corporation and New York Life Insurance Company.
 
Richard Badler will be our Executive Vice President, Corporate Communications and Public Affairs. Prior to the spin-off, he served in a similar capacity with Western Union from June 2006. From July 1998 to May 2006, he was the Senior Vice President, Corporate Communications of Unisys Corporation, a computer services, hardware and software company.
 
David Barnes will be our Executive Vice President, Finance and Strategic Development. Prior to joining Western Union in 2006, Mr. Barnes was Chief Financial Officer of Radio Shack Corporation starting in April
 
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2005. In March 1999, Mr. Barnes joined Adolph Coors Company as Vice President and Treasurer of Adolph Coors and Vice President of Finance and Treasurer of Coors Brewing Company. In 2002, he became Chief Financial Officer of Coors U.S.
 
Guy A. Battista will be our Executive Vice President and President of Western Union Financial Services, Inc. Prior to the spin-off, he was an Executive Vice President and Chief Information Officer of First Data from March 2001 to 2006. Mr. Battista joined First Data in 1990.
 
Royal Cole III will be our Executive Vice President and General Manager, Western Union Payment Services. Prior to the spin-off, Mr. Cole had responsibility for Western Union’s Payment Services including Retail Money Orders and Prepaid Services from December 2005 to 2006. From December 2001 to December 2005, he was Senior Vice President and General Manager of Agent Network Management for Western Union. Prior to that time, Mr. Cole was Senior Vice President and General Manager of ValueLink from November 1999 to November 2001. Prior to joining Western Union in 1991, Mr. Cole held sales and sales management positions with the Pepsi-Cola Company.
 
Hikmet Ersek will be our Executive Vice President, Europe/Middle East/Africa/South Asia. Prior to the spin-off, Mr. Ersek held various positions with Western Union. From March 2004 to 2006 he was Senior Vice President, Europe/Middle East/Africa/South Asia and from October 2002 to March 2004 he was Senior Vice President, Europe/Middle East/Africa. Prior to that time, Mr. Ersek was Regional Vice President, Central and Eastern Europe from July 2001 to October 2002. Prior to joining Western Union in September 1999, Mr. Ersek was with GE Capital specializing in European payment systems and consumer finance.
 
Robin Heller will be our Executive Vice President, Operations and IT. Prior to the spin-off, she was Senior Vice President, Global Operations for First Data from November 2004 until 2006. From July 2003 to November 2004, Ms. Heller served in a similar capacity with Western Union. Prior to that time, she was Senior Vice President, Sales, Marketing and Operations for Western Union Commercial Services from July 2002 until June 2003 and Senior Vice President, Operations and Client Management for IPS, a First Data subsidiary, from July 2000 until June 2002. Ms. Heller joined First Data in 1988.
 
Ian Marsh will be our Executive Vice President and Managing Director, Asia Pacific Region. Prior to the spin-off, he served in a similar capacity in Western Union from March 2004 to 2006. Prior to joining Western Union in 2004, Mr. Marsh was President, Reader’s Digest Europe from May 2001 to February 2003 and had a 30-year career with American Express, most recently serving as President and Chief Executive Officer, Japan. 
 
Scott Scheirman will be our Executive Vice President and Chief Financial Officer. Prior to the spin-off, Mr. Scheirman held a variety of positions with First Data, most recently serving as the Senior Vice President and Chief Financial Officer for Western Union from 1999 to 2006. Prior to joining First Data, Mr. Scheirman was with Ernst & Young LLP where he was responsible for leading multiple audit and business advisory services. Mr. Scheirman serves as the Chairman of the First Data Corporation/Western Union Foundation. Mr. Scheirman joined First Data in 1992.
 
David Schlapbach will be our General Counsel and Secretary. Prior to the spin-off Mr. Schlapbach held a variety of positions at First Data since joining it in 1996, including Deputy General Counsel - International, with responsibility for First Data’s legal matters outside the United States. In this capacity, he worked in First Data’s Paris office for four years, returning in 2004 to become General Counsel for Western Union. Prior to joining First Data, Mr. Schlapbach was an attorney at the law firm of Blackwell Sanders Peper Martin LLP in St. Louis, Missouri.
 
William D. Thomas will be our President of The Americas. Prior to the spin-off, he served as the President of The Americas for Western Union from June 2003 to 2006. Mr. Thomas joined Western Union in August 2000 as President of Western Union Financial Services International, based in Paris, France, a position he held until
 
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June 2003. Prior to joining Western Union, Mr. Thomas worked for Bristol-Meyers Squibb’s Mead Johnson Nutritional Division, where he spent 13 years and most recently held the position of President, International Operations.
 
Grover Wray will be our Executive Vice President of Human Resources. He served in a similar capacity for Western Union since joining us in October 2005. Prior to joining Western Union, Mr. Wray held senior human resources positions for Janus Capital Group from 2004 to 2005, Heidrick & Struggles from 2003 to 2004 and Arthur Andersen LLP from 1988 to 2003.
 
Jack M. Greenberg will be our Non-Executive Chairman of our board of directors. He was Chairman (from May 1999) and Chief Executive Officer (from August 1998) of McDonald’s Corporation until December 2002. Mr. Greenberg joined McDonald’s Corporation as Executive Vice President and Chief Finance Officer and as a member of the Board of Directors in 1982. He served as a director of First Data Corporation from 2003 to 2006. Mr. Greenberg is a Director of Abbott Laboratories, The Allstate Corporation, Hasbro, Inc. and Manpower Inc.
 
Dinyar S. Devitre will be one of our directors. He has been Senior Vice President and Chief Financial Officer of Altria Group, Inc. since March 2002. From 2001 to 2002 Mr. Devitre acted as a private business consultant and from 1998 to 2001 he was Executive Vice President at Citibank in Europe. He started with the Altria Group companies in 1970 and served in a variety of positions, serving as President Philip Morris, Asia, Chief Executive Officer Philip Morris, Japan, and Senior Vice President, Corporate Planning, Philip Morris Companies, Inc. from 1995 to 1998. Mr. Devitre is a Director of Kraft Foods Inc.
 
Betsy D. Holden will be one of our directors. She served as President-Global Marketing and Category Development of Kraft Foods Inc., a food business unit of Altria Group Inc., from January 2004 through June 2005; Co-Chief Executive Officer of Kraft Foods Inc. from March 2001 until December 2003; and President and Chief Executive Officer of Kraft Foods North America from May 2000 until December 2003. Ms. Holden began her career at General Foods in 1982. She has been Director of Tribune Company since 2002.
 
Alan J. Lacy will be one of our directors. Mr. Lacy is the former Vice Chairman and Chief Executive Officer of Sears Holding Corporation which formed as a result of the merger of Sears, Roebuck and Co. and Kmart Holding Corporation. He served in those portions from March 2005 through July 2006. He previously served Sears as Chairman of the Board since December 2000, and as President and Chief Executive Officer since October 2000. Also for Sears, Mr. Lacy was President, Services, from 1999 to October 2000, President of Sears Credit from 1997 to 1999 (additionally Chief Financial Officer from 1998 to 1999) and Executive Vice President and Chief Financial Officer from 1995 to 1997.
 
Roberto G. Mendoza will be one of our directors. Mr. Mendoza has been Chairman of the Board and Managing Director of Integrated Finance Limited, a financing advisory company he co-founded, since 2002. He has also served as Managing Director of Goldman Sachs. From 1967 to 1972 and from 1975 to 2000, Mr. Mendoza held positions at JP Morgan & Co. Inc., serving from 1990 to 2000 as Director and Vice Chairman of the Board. He is a Director of Prudential plc.
 
Mike Miles will be one of our directors. He has served Staples, Inc. as President since January 2006 and as Chief Operating Officer since September 2003. Prior to that, Mr. Miles was Chief Operating Officer, Pizza Hut for Yum! Brands, Inc. from January 2000 to August 2003. From 1996 to 1999 he served Pizza Hut as Senior Vice President of Concept Development & Franchise.
 
Annual Meeting
 
Our amended and restated by-laws will provide that an annual meeting of stockholders will be held each year on a date specified by our board of directors. We expect the first annual meeting of our stockholders following the spin-off to be held in 2007.
 
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Committees of the Board of Directors
 
Pursuant to our amended and restated by-laws, our board of directors will be permitted to establish committees from time to time as it deems appropriate. Initially, to facilitate independent director review and to make the most effective use of the directors’ time and capabilities, our board of directors will establish the following committees: audit committee, corporate governance and compliance committee and compensation and benefits committee. The membership and function of each committee are described below.
 
Audit Committee
 
The audit committee will be comprised solely of directors who meet the independence requirements of the New York Stock Exchange and the Exchange Act, and are financially literate, as required by the New York Stock Exchange. At least one member of the audit committee will be a financial expert, as defined by the rules and regulations of the SEC. No director will be permitted to serve as a member of the audit committee if such director serves on the audit committee of more than two other public companies unless our board of directors determines that such simultaneous service would not impair the ability of such director to serve effectively on the audit committee. The audit committee will assist the board of directors in fulfilling its oversight responsibilities with respect to:
 
 	•	 	the integrity of our financial statements;	
 
 	•	 	our disclosure controls and procedures;	
 
 	•	 	the independence and qualification of our independent registered public accounting firm;	
 
 	•	 	the performance of our internal auditors and our independent registered public accounting firm;	
 
 	•	 	our contingency plans for business continuity; and	
 
 	•	 	preparing the report of the audit committee to be included in our annual proxy statement.	
 
We expect that our audit committee will establish a policy to pre-approve all audit and non-audit services provided by our independent registered public accounting firm and all accounting firms. These services may include audit services, audit-related services, tax services and other services. We expect that the policy will provide that pre-approval will generally provided for up to one year and that any pre-approval must be detailed as to the particular service or category of services and is subject to a specific budget. We also expect that the policy will provide that once pre-approved, the services and pre-approved amounts will be monitored against actual charges incurred and modified if appropriate. The audit committee will be governed by the audit committee charter, which will be available at our website www.westernunion.com.
 
We expect that the members of the audit committee as of the date of the spin-off will be [•].
 
Corporate Governance and Compliance Committee
 
The corporate governance and compliance committee will be comprised solely of directors who meet the independence requirements of the New York Stock Exchange. The corporate governance and compliance committee will be responsible for:
 
 	•	 	recommending to our board of directors criteria for selecting new directors and committee members;	
 
 	•	 	assessing, considering and recruiting candidates to fill positions on our board of directors;	
 
 	•	 	evaluating current directors for re-nomination to our board of directors;	
 
 	•	 	recommending the director nominees for approval by our board of directors and our stockholders;	
 
 	•	 	recommending to our board of directors appointments to committees;	
 
 	•	 	reviewing at least annually and recommending modifications to our board of directors corporate governance guidelines;	
 
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 	•	 	advising our board of directors with respect to the charters, structure, operations and membership qualifications for the various committees of our board of directors;	
 
 	•	 	overseeing the development and implementation of an orientation and continuing education program for our directors;	
 
 	•	 	establishing and implementing self-evaluation procedures for our board of directors and its committees and overseeing the reporting to our board of directors by the committees;	
 
 	•	 	reviewing and advising our board of directors regarding stockholder proposals submitted for inclusion in our proxy statement;	
 
 	•	 	reviewing any significant legal, compliance or regulatory matters that may have a material effect on us;	
 
 	•	 	consulting with our management, internal auditors and independent register public accounting firm regarding the procedures to insure compliance with laws and regulations to which we are subject; and	
 
 	•	 	reviewing the program established by our management to monitor compliance with our code of conduct and approving any waiver of the code for our directors and executive officers.	
 
The corporate governance and compliance committee will be governed by the corporate governance and compliance committee charter, which will be available at our website www.westernunion.com.
 
We expect that the members of the corporate governance and compliance committee as of the date of the spin-off will be [•].
 
Compensation and Benefits Committee
 
The compensation and benefits committee will be comprised solely of directors who meet the independence requirements of the New York Stock Exchange, meet the requirements for “Non-Employee Directors” under the Exchange Act, and meet the requirements for “outside directors” under the Internal Revenue Code. The compensation and benefits committee will be responsible for:
 
 	•	 	overseeing our compensation and benefit plans generally;	
 
 	•	 	recommending to our board of directors compensation for outside directors;	
 
 	•	 	establishing our general compensation philosophy and overseeing the development and implementation of compensation and benefit programs;	
 
 	•	 	with input from our board of directors, reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and other executive officers, evaluating the performance of our chief executive officer and other executive officers in light of those goals and objectives, and setting our chief executive officer’s and other executive officers’ compensation levels based on this evaluation;	
 
 	•	 	establishing, overseeing and delegating authority to employee committees with respect to our employee compensation and benefit plans;	
 
 	•	 	overseeing our regulatory compliance with respect to compensation matters;	
 
 	•	 	reviewing and approving severance or similar termination payments to any of our current or former executive officers;	
 
 	•	 	preparing reports on executive compensation;	
 
 	•	 	reporting activities of the compensation and benefits committee to our board of directors on a regular basis and reviewing issues with our board of directors as the compensation and benefits committee deems appropriate;	
 
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 	•	 	preparing and reviewing with our board of directors an annual performance evaluation of the compensation and benefits committee; and	
 
 	•	 	reviewing our management succession planning.	
 
The compensation and benefits committee will be governed by the compensation and benefits committee charter, which will be available at our website www.westernunion.com.
 
We expect that the members of the compensation and benefits committee as of the date of the spin-off will be [•].
 
Corporate Governance
 
Communications with the Board of Directors
 
After the spin-off, any holder of our stock who desires to contact the non-management directors or the other members of our board of directors may do so by writing to: The Western Union Company, Non-Executive Chairman of the Board of Directors, 12500 East Belford Avenue, Englewood, Colorado 80112. Communications that are intended specifically for non-management directors, whom we refer to as outside directors, should be addressed to the attention of the chairperson of the corporate governance and compliance committee. All communications will be forwarded to the chairperson of the corporate governance and compliance committee unless the communication is specifically addressed to another member of the board of directors, in which case, the communication will be forwarded to that director.
 
Presiding Director of Outside Director Meetings
 
We expect that the outside directors will meet in regularly scheduled executive sessions without management to promote open and honest discussion. We expect that the non-executive chairperson of our board of directors or, if there is no non-executive chairperson, the chairperson of the corporate governance and compliance committee, will be the presiding director at these meetings.
 
Nomination of Directors
 
The board of directors is responsible for nominating directors for election by the stockholders and filling any vacancies on the board of directors that may occur. The corporate governance and compliance committee will be responsible for identifying, screening and recommending candidates to the board of directors for membership. In formulating its recommendations, the corporate governance and compliance committee will consider recommendations offered by any stockholder, director or officer of Western Union.
 
Director Qualifications
 
General criteria for the nomination of director candidates include experience, integrity, skills, diversity, ability to make independent analytical inquiries, understanding of our business environment, international experience and willingness to devote adequate time to board of directors duties—all in the context of an assessment of the perceived needs of the board of directors at that point in time. It is expected that in exercising its director nomination responsibilities, the corporate governance and compliance committee will consider women and minority candidates consistent with our nondiscrimination policies. Each director will be expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as a director or committee member.
 
Code of Ethics
 
We expect that our Director Code of Conduct, Code of Ethics for Senior Financial Officers, Employee Complaint Policy for Accounting and Auditing Matters, Professional Conduct Policy for Attorneys, and the
 
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Employee Code of Conduct will available without charge through the “Governance” portion of our web site, www.westernunion.com, or by writing to the attention of: Investor Relations, The Western Union Company, 12500 East Belford Avenue, Englewood, Colorado 80112.
 
Compensation of Directors
 
Cash Compensation
 
We expect that each outside director (other than our Non-Executive Chairman) will receive the following cash compensation for service on our board of directors and committees of our board of directors:
 
 	•	 	an annual retainer fee of $70,000;	
 
 	•	 	an annual retainer fee of $15,000 for the chairperson of each committee of our board of directors other than the audit committee; and	
 
 	•	 	an annual retainer fee of $25,000 for the chairperson of the audit committee of our board of directors and $10,000 for each other member of the audit committee of our board of directors.	
 
Directors who also are our employees will not receive any of the compensation described above.
 
Equity Compensation
 
Each outside director will have the option of electing to receive such director’s annual retainer fees described above in the form of (a) all cash, (b) a combination of 75% stock options and 25% fully vested stock units or (c) all fully vested stock units with the equity awards being made pursuant to the 2006 Non-Employee Director Compensation Equity Plan (the “2006 Director’s Plan”), which we intend to adopt, subject to the approval of First Data in its capacity as our sole stockholder. All stock units will be settled in shares of Western Union common stock and may be subject to a deferral election consistent with Internal Revenue Code Section 409A.
 
The purpose of the 2006 Director’s Plan will be to advance the interest of Western Union and its stockholders by encouraging increased stock ownership by our outside directors, in order to promote long-term stockholder value through continuing ownership of our common stock.
 
We expect that each outside director (other than our Non-Executive Chairman) will receive the following equity compensation under the 2006 Director’s Plan for service on our board of directors and committees of our board of directors:
 
 	•	 	an annual grant of options to purchase shares of our common stock with a value of $75,000;	
 
 	•	 	an annual grant of fully vested stock units with a value of $25,000; and	
 
 	•	 	options to purchase shares of our common stock with a value of $75,000 and fully vested stock units with a value of $25,000 upon initially becoming a director and upon reelection to serve as a director.	
 
Directors who also are our employees will not receive any of the compensation described above.
 
Compensation of Our Non-Executive Chairman
 
In lieu of the compensation outlined above for other outside directors, we expect that our Non-Executive Chairman will receive the following compensation:
 
 	•	 	an annual retainer fee of $100,000;	
 
 	•	 	an annual grant of options to purchase shares of our common stock with a value of $262,500;	
 
 	•	 	an annual grant of fully vested stock units with a value of $87,500;	
 
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 	•	 	options to purchase shares of our common stock with a value of $75,000 and fully vested stock units with a value of $25,000 upon initially becoming our Non-Executive Chairman and upon reelection to serve in such capacity.	
 
Our Non-Executive Chairman will have the option to receive his annual retainer fee in the form of (a) all cash, (b) a combination of 75% stock options and 25% fully vested stock units, or (c) entirely in the form of fully vested stock units, with the equity awards being made pursuant to our 2006 Director’s Plan.
 
Reimbursements
 
Directors will be reimbursed for their expenses incurred in attending board of directors, committee and stockholder meetings, including those for travel, meals and lodging.
 
Indemnification Agreements
 
We will enter into director indemnification agreements with each of our outside directors. Consistent with the indemnification rights that will be provided to all of our directors under our amended and restated certificate of incorporation, we will indemnify and hold harmless each outside director to the fullest extent permitted or authorized by the General Corporation Law of the State of Delaware in effect on the date of the agreement or as such laws may be amended or replaced to increase the extent to which a corporation may indemnify its directors.
 
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 EXECUTIVE COMPENSATION
 
Historical Compensation of Executive Officers
 
The following table contains compensation information for our Chief Executive Officer and four other persons who are our executive officers and who, based on employment with First Data, were the most highly compensated for the year ended December 31, 2005. We will refer to these executive officers as the “named executive officers.” All of the information included in this table reflects compensation earned by the named executive officers for services rendered to First Data and its subsidiaries. Unless the context suggests otherwise, references to “restricted stock,” “restricted stock units” and “stock options” mean shares of First Data common stock and options to purchase First Data common stock, respectively. Amounts shown are for the individuals in their last position with First Data and do not necessarily reflect the compensation which these individuals will earn in their new capacities as our executive officers.
 
Summary Compensation Table

 	 	 	 	Annual Compensation	 	 	Long Term Compensation	 	 	All Other
Compensation
($)(1)	
Name and Principal Position	 	Year	 	Salary($)	 	Bonus($)	 	Other Annual
Compensation($)	 	 	Restricted
Stock
Awards($)	 	 	Securities
Underlying
Options (#)(3)	 	LTIP
Payouts($)	 	 		
Christina A. Gold	 	2005	 	625,000	 	0	 	0	 	 	2,003,750	(2)	 	150,000	 	0	 	 	45,295	
Chief Executive Officer	 	2004	 	500,000	 	600,000	 	0	 	 	2,040,750	(2)	 	100,000	 	0	 	 	24,487	
	 	2003	 	500,000	 	480,000	 	0	 	 	0	 	 	75,000	 	0	 	 	11,004	
									
Guy A. Battista	 	2005	 	520,833	 	0	 	0	 	 	1,402,625	(4)	 	100,000	 	963,346	(5)	 	205,972	
Executive Vice President and	 	2004	 	487,500	 	450,000	 	0	 	 	2,040,750	(4)	 	100,000	 	1,031,293	(6)	 	168,034	
President, Western Union
Financial Services, Inc.	 	2003	 	420,833	 	235,025	 	0	 	 	0	 	 	60,000	 	492,558	(7)	 	121,363	
									
William D. Thomas	 	2005	 	397,500	 	120,000	 	0	 	 	0	 	 	50,000	 	578,008	(5)	 	43,090	
President of The Americas	 	2004	 	383,333	 	280,000	 	296,228	(8)	 	0	 	 	100,000	 	0	 	 	17,661	
	 	2003	 	350,000	 	209,371	 	540,248	(8)	 	0	 	 	50,000	 	0	 	 	18,729	
									
Hikmet Ersek(9)	 	2005	 	355,712	 	99,367	 	0	 	 	0	 	 	0	 	0	 	 	25,354	
Executive Vice President, Europe/	 	2004	 	368,028	 	197,081	 	0	 	 	0	 	 	80,000	 	0	 	 	25,710	
Middle East/Africa/South Asia	 	2003	 	324,956	 	117,601	 	0	 	 	0	 	 	36,600	 	0	 	 	20,899	
									
Ian Marsh(9)	 	2005	 	291,420	 	75,065	 	360,762	(10)	 	0	 	 	0	 	0	 	 	29,142	
Executive Vice President and	 	2004	 	245,007	 	167,558	 	287,901	(10)	 	0	 	 	55,000	 	0	 	 	0	
Managing Director, Asia
Pacific Region	 	2003	 	0	 	0	 	0	 	 	0	 	 	0	 	0	 	 	0	

(1)	Amounts shown for the named executive officers include contributions by us to defined contribution plans and the dollar value of above market interest accrued in First Data’s Supplemental Incentive Savings Plan. For 2005, these amounts were, respectively, as follows: Ms. Gold: $36,750/$8,545, Mr. Battista: $181,813/$24,159, Mr. Thomas: $39,665/$3,425, Mr. Ersek: $25,354/$0 and Mr. Marsh: $29,142/$0.	
(2)	The value at December 31, 2005 of Ms. Gold’s 100,000 shares of restricted stock was $4,288,000. 50,000 shares of Ms. Gold’s restricted stock award vest, if she is still employed by our company at the time, at 25% per year on the anniversary date of the grant (February 23, 2005). The remaining 50,000 shares vest, if she is still employed by our company at the time, on the earlier of (i) February 25, 2009 or (ii) at any time after February 25, 2007 if on each trading day during the previous 30-day period the highest intra-day trading price of the First Data’s common stock on the New York Stock Exchange is equal to or greater than $70.00 per share. Vesting may be accelerated pursuant to the terms of First Data’s 2002 Long-Term Incentive Plan. Dividends on all restricted shares are paid at the same rate as paid to all stockholders; however, the cash dividends accrue during the restriction period(s) and are paid at the time the restrictions on the shares lapse.	
(3)	Vesting of these options was accelerated on December 22, 2005.	
(4)	The value at December 31, 2005 of Mr. Battista’s 85,000 shares of restricted stock was $3,644,800. 35,000 shares of Mr. Battista’s restricted stock award vest, if he is still employed by our company at the time, at	
 
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 	25% per year on the anniversary date of the grant (February 23, 2005). The remaining 50,000 shares vest, if he is still employed by our company at the time, on the earlier of (i) February 25, 2009 or (ii) at any time after February 25, 2007 if on each trading day during the previous 30-day period the highest intra-day trading price of First Data’s common stock on the New York Stock Exchange is equal to or greater than $70.00 per share. Vesting may be accelerated pursuant to the terms of First Data’s 2002 Long-Term Incentive Plan. Dividends on all restricted shares are paid at the same rate as paid to all stockholders; however, the cash dividends accrue during the restriction period(s) and are paid at the time the restrictions on the shares lapse.	
(5)	2005 LTIP Payout Awards for Mr. Battista and Mr. Thomas represent amounts for the two-year performance period ended December 31, 2002, as adjusted for the performance of First Data common stock in the following two years.	
(6)	2004 LTIP Payout Awards for Mr. Battista represent amounts for the two-year performance period ended December 31, 2001, as adjusted for the performance of First Data common stock in the following two years.	
(7)	2003 LTIP Payout Awards for Mr. Battista represent amounts for the two-year performance period ended December 31, 2000, as adjusted for the performance of First Data common stock in the following two years.	
(8)	2004 amount includes payment of ex-patriate expenses associated with Mr. Thomas’ international assignment which totaled $235,739 and relocation expenses which totaled $59,165. 2003 amount includes payment of ex-patriate expenses associated with Mr. Thomas’ international assignment which totaled $480,436 and relocation expenses which totaled $24,150.	
(9)	Compensation for Mr. Ersek and Mr. Marsh is paid in foreign currency which has been converted to U.S. dollars for each year at the exchange rate in effect for the last business day of each year.	
(10)	Includes payment of ex-patriate expenses, such as housing, utilities, cost of living allowance and travel, associated with Mr. Marsh’s international assignment which totaled $354,784 in 2005 and $282,934 in 2004.	
 
Stock Option Grants
 
The following table contains information relating to the First Data stock option grants made in 2005 to the named executive officers. The options are subject to the terms of the First Data 2002 Long-Term Incentive Plan. In connection with the spin-off, we intend to adopt, with the approval of First Data in its capacity as our sole stockholder, the 2006 Western Union Company Long-Term Incentive Plan and, subject to the approval of First Data’s compensation and benefits committee, options to acquire First Data common stock that are outstanding immediately prior to the spin-off and are held by the named executive officers will be replaced with substitute options to purchase our common stock.
 
Options Grants in 2005

 	  	Number of
Securities
Underlying
Option
Granted(1)	  	Percent of
Total Options
Granted to
Employees in
Fiscal
Year(2)	  	Exercise or
Base Price
($/sh)	  	Expiration
Date	  	 	
 	  		  		  		  		  	Grant Date Present Value(3)	
Christina A. Gold	  	150,000	  	3.67	  	40.0750	  	02/23/2015	  	$	2,699,385	
Guy A. Battista	  	100,000	  	2.45	  	40.0750	  	02/23/2015	  	$	1,799,590	
William D. Thomas	  	50,000	  	1.22	  	40.0750	  	02/23/2015	  	$	614,105	
Hikmet Ersek	  	0	  	N/A	  	N/A	  	N/A	  	 	N/A	
Ian Marsh	  	0	  	N/A	  	N/A	  	N/A	  	 	N/A	

(1)	Options were granted under the First Data 2002 Long-Term Incentive Plan and carry an exercise price of 100% of the fair-market value of the underlying First Data common stock on the date of grant and vesting was accelerated on December 22, 2005.	
(2)	Based on options to purchase an aggregate of 4,084,600 shares granted to employees of First Data under the First Data 2002 Long-Term Incentive Plan during 2005.	
(3)	These values were calculated using the Black-Scholes single option-pricing model, a formula widely used and accepted for valuing traded stock options. Any ultimate value will depend on the market value of our	
 
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 	common stock at a future date. First Data uses assumptions that consider all substantive characteristics of the options and are based on an analysis of historical information, external data, and other factors. Assumptions used are based on grant date of the options. The following assumptions were used to calculate the values for grants under the First Data 2002 Long-Term Incentive Plan with the exception of Mr. Thomas: estimated future dividend yield of .567%; expected price volatility of 37.00%; weighted average risk-free rate of return of 4.143%. Estimated future dividend yield of .567%; expected price volatility of 31.40%; weighted average risk-free rate of return of 3.749% was used for Mr. Thomas. See Note 15—“Stock Compensation Plans” to our historical combined financial statements.	
 
Stock Option Exercises
 
The following table contains information relating to the exercise of options to purchase First Data common stock by the named executive officers in 2005, as well as the number and value of their unexercised options to purchase First Data common stock as of March 31, 2006.

Name and Principal Position	  	Shares
Acquired
on
Exercise
(#)	  	Value
Realized
($)	  	Shares Subject to Options
at March 31, 2006 (#)	  	Value of Unexercised
In-The-Money Options at
March 31, 2006(1)	
	  		  		  	Exercisable	  	Unexercisable	  	Exercisable ($)	  	Unexercisable ($)	
Christina A. Gold	  	0	  	0	  	475,000	  	250,000	  	3,425,250	  	341,250	
Guy A. Battista	  	3,000	  	71,525	  	588,332	  	150,000	  	8,415,218	  	204,750	
William D. Thomas	  	84,500	  	1,064,744	  	0	  	32,000	  	0	  	88,480	
Hikmet Ersek	  	0	  	0	  	167,698	  	40,000	  	1,566,196	  	110,600	
Ian Marsh	  	0	  	0	  	55,000	  	17,000	  	296,975	  	47,005	

(1)	The amounts shown for options granted under the First Data 2002 Long-Term Incentive Plan reflect the $46.6950 average high and low prices of First Data common stock on March 31, 2006 less the option exercise price, but they do not reflect the impact of taxes.	
 
Restricted Stock
 
The following table contains information relating to grants of First Data restricted stock made in 2005 to the named executive officers. We expect that, subject to the approval of First Data’s compensation and benefits committee, in connection with the spin-off, outstanding restricted stock awards granted to the named executive officers under the First Data equity compensation plans will be replaced with substitute Western Union restricted stock awards and continue to vest on the same schedule. See “Our Relationship with First Data After the Spin-Off—Employee Matters Agreement.”

 	  	Individual Grants	  	 	  	 	
Name	  	Number of
Restricted
Stock
Awards
Issued	 	 	% of Total
Restricted
Stock Issued
in 2005(1)	  	Market Value
($/share)	  	Total Issue Date
Market Value ($)	
Christina A. Gold	  	50,000	(2)	 	9.09	  	40.0750	  	2,003,750	
Guy A. Battista	  	35,000	(2)	 	6.36	  	40.0750	  	1,402,625	
William D. Thomas	  	0	 	 	0.00	  	N/A	  	N/A	
Hikmet Ersek	  	0	 	 	0.00	  	N/A	  	N/A	
Ian Marsh	  	0	 	 	0.00	  	N/A	  	N/A	

(1)	Based on aggregate of 550,000 restricted stock awards granted to employees under the First Data Corporation 2002 Long-Term Incentive Plan during 2005.	
(2)	Restricted stock award vests, if the executive is still employed by the company at the time, at 25% per year on the anniversary date of the grant. Vesting may be accelerated pursuant to the terms of First Data Corporation’s 2002 Long-Term Incentive Plan.	
 
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Defined Benefit Retirement Plan
 
First Data’s defined benefit retirement plans were frozen in 1997. Mr. Battista has a frozen benefit, which would provide for an annual payment at age 65 of approximately $6,052.32.
 
Employment Agreement
 
Western Union Hong Kong Limited, one of our subsidiaries, is party to an employment agreement with Mr. Marsh, pursuant to which Mr. Marsh has served as our Senior Vice President and Managing Director, Asia Pacific, since February 2004. The terms of Mr. Marsh’s employment agreement provide for (i) annual base salary of $280,000, (ii) eligibility to participate in health and welfare benefits programs, (iii) vacation leave, (iv) a car allowance, (v) an international service allowance, (vi) certain allowances related to maintaining a residence, (vii) club membership fees, (viii) certain travel expenses for Mr. Marsh’s children and (ix) tax preparation assistance. Mr. Marsh’s employment agreement also includes non-solicitation and confidentiality provisions. Mr. Marsh has also agreed, for a period of twelve months following termination of his employment for any reason, not to compete against Western Union in Taiwan, Hong Kong, China or any other country in which Mr. Marsh worked during the two-year period prior to the date of termination of his employment. Mr. Marsh will be paid one month’s salary for each month of his non-competition agreement. The employment agreement does not have a fixed term but either party may terminate the agreement upon one month’s prior written notice, provided that Western Union Hong Kong may terminate the employment agreement for justifiable cause (as defined in the agreement) without prior written notice to Mr. Marsh. The employment agreement does not provide for any severance payments upon termination of employment, other than the payments described above in connection with the non-competition provisions of the agreement.
 
Executive Severance Plan
 
Effective as of the time of the spin-off, we intend to establish and adopt an executive severance plan for the payment of certain benefits to senior executives, including our named executive officers, upon termination of employment from Western Union and upon a change of control of Western Union.
 
Western Union Company 2006 Long-Term Incentive Plan
 
We intend to adopt, subject to the approval of First Data, in its capacity as our sole stockholder, the Western Union Company 2006 Long-Term Incentive Plan (the “2006 LTIP”). The purposes of the 2006 LTIP will be (i) to advance the interests of Western Union by attracting and retaining high caliber employees and other key individuals, (ii) to align the interests of Western Union’s stockholders and recipients of awards under the 2006 LTIP by increasing the proprietary interest of such recipients in Western Union’s growth and success and (iii) to motivate award recipients to act in the long-term best interests of Western Union and its stockholders.
 
Shares Available.  [            ] million (            ) shares of our common stock may be subject to awards under the 2006 LTIP (the “Plan Share Limit”), subject to adjustment in the event of a stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar event. Shares of our common stock subject to stock options and stock appreciation rights shall apply against and reduce the Plan Share Limit as one share for every one share subject thereto. Shares of our common stock subject to restricted stock, bonus stock or restricted stock unit awards and performance grants shall apply against and reduce the Plan Share Limit as [•] shares for every one share subject thereto or payable pursuant thereto. If with respect to any award (i) such award is cancelled, forfeited, or terminates or expires unexercised or (ii) the exercise price is paid in shares of common stock, or shares of common stock are withheld to satisfy all or a portion of the exercise price of the award or the tax withholding obligations relating to an award, such shares may again be issued under the 2006 LTIP in a manner that is consistent with the Plan Share Limit deductions described above.
 
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Eligibility.  All employees of Western Union, its subsidiaries and their respective affiliates and other individuals who perform services for Western Union, a subsidiary of Western Union or any of their respective affiliates will be eligible to receive awards. Our compensation and benefits committee will have discretion to select participants and determine the form, amount and timing of each award to such persons, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of an award.
 
Forms of Awards. Awards under the 2006 LTIP may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights (“SARs”), (iii) restricted stock awards, (iv) restricted stock unit awards, (v) phantom stock units, (vi) performance grants and (vii) bonus awards.
 
Options are rights to purchase a specified number of shares of our common stock at a price fixed by our compensation and benefits committee. In the case of purchased stock options, a specified number of nonqualified
stock options are offered for grant to selected participants in exchange for a purchase price that is payable at the time of grant. Options generally expire no later than ten years after the date of grant. Options will become exercisable at such time and in such installments as our compensation and benefits committee will determine; however, the minimum vesting period is generally six months. Payment of the option price (sometimes called the exercise price or strike price) must be made in full at the time of exercise in such form as our compensation and benefits committee shall determine. Payment methods will include cash, the exchange of shares already owned, broker-cashless exercise, or a combination of cash and exchange of shares. Incentive stock options may not be granted to any person who is not an employee of Western Union or any parent or subsidiary, as defined in section 424 of the Internal Revenue Code. All incentive stock options must be granted within ten years of the date the 2006 LTIP is approved by our compensation and benefits committee.
 
A SAR entitles the holder to receive, upon exercise, an amount equal to the positive difference between the fair market value of one share of common stock on the date the SAR is exercised and the exercise price, multiplied by the number of shares of common stock with respect to which the SAR is exercised. The compensation and benefits committee will have the power to determine whether the amount to be paid upon exercise of a SAR will be paid in cash, common stock (including restricted stock) or a combination of cash and common stock.
 
Restricted stock awards provide for a specified number of shares of common stock subject to a restriction against transfer during a period of time or until performance measures are satisfied, as established by our compensation and benefits committee. Unless otherwise set forth in the agreement relating to a restricted stock award, the holder has all rights as a stockholder of Western Union, including voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of common stock.
 
A restricted stock unit award is a right to receive a specified number of shares of our common stock (or the fair market value thereof in cash, or any combination of our common stock and cash, as determined by our compensation and benefits committee), subject to the expiration of a specified restriction period and/or the achievement of any performance measures selected by the compensation and benefits committee, consistent with the terms of the 2006 LTIP. The minimum restriction period is generally one year. The restricted stock unit award agreement will specify whether the award recipient is entitled to receive dividend equivalents with respect to the number of shares of our common stock subject to the award. Prior to the settlement of a restricted stock unit award in our common stock, the award recipient will have no rights as a stockholder of our company with respect to our common stock subject to the award.
 
Phantom stock units are rights to receive a cash or stock bonus based on the performance of our common stock.
 
Performance grants are awards whose final value, if any, is determined by the degree to which specified performance measures have been achieved during a performance period set by our compensation and benefits
 
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committee. Performance measures that may be used include one or more of the following: the attainment by a share of common stock of a specified value within or for a specified period of time, earnings per share, earnings before interest expense and taxes, return to stockholders (including dividends), return on equity, earnings, revenues, market share, cash flow or cost reduction goals, operating profit, pretax return on total capital, economic value added or any combination of the foregoing. Such criteria and objectives may relate to results obtained by the individual, Western Union, a subsidiary, or an affiliate, or any business unit or division thereof, or may relate to results obtained relative to a specific industry or a specific index. Payment may be made in the form of cash, common stock, restricted stock, restricted stock units or a combination thereof, as specified by our compensation and benefits committee.
 
Bonus stock awards are shares of our common stock which are vested at the time of grant and are not subject to a restriction period or performance measures.
 
The 2006 LTIP also provides for replacement and substitute awards for certain current and former employees and directors of First Data in connection with the spin-off of Western Union; provided however, that any such replacement or substitute award shall be subject to the same terms and conditions as the original First Data award to which it relates. In exercising its power and authority hereunder with respect to replacement and substitute awards held by employees of First Data, our compensation and benefits committee shall, in good faith, cooperate with and give due regard to any information provided by First Data.
 
Termination of Employment.  The effect of a participant’s termination of employment on his or her award depends on the reason for such termination. For stock options and SARs, unless otherwise specified in the agreement, termination of employment due to disability or death will result in the option becoming fully vested and exercisable for a period of one year from the date employment terminates or, if earlier, the date on which the option or SAR expires; involuntary termination without cause will result in the option or SAR being exercisable, to the extent vested on the date employment terminates, for a period of three months thereafter or, if earlier, the date on which the option or SAR expires; termination of employment due to retirement will result in the award continuing to vest and will be exercisable until four years following the date of retirement or, if earlier, the date on which the option or SAR expires; termination of employment for reasons other than disability, death, retirement or involuntary termination without cause will result in the option or SAR ceasing to vest, and to the extent vested, such stock option or SAR may be exercised until the close of the New York Stock Exchange on the date which is the thirtieth day following the date of termination, provided that if the New York Stock Exchange is closed on such date, then such stock option or SAR will be forfeited and canceled by Western Union effective with the close of the New York Stock Exchange on the next following day on which the New York Stock Exchange is open; termination of employment for cause will result in the option or SAR ceasing to vest, and to the extent vested, such option or SAR may be exercised until the close of the New York Stock Exchange on the date of termination, provided that if the New York Stock Exchange is closed on such date, then the option or SAR shall be forfeited and cancelled by Western Union at the time of termination.
 
For restricted stock or restricted stock unit awards, unless otherwise specified in the agreement, termination of employment due to disability or death will cause the restriction period to lapse on the date employment terminates and will result in any performance measures applicable to such award being deemed to have been satisfied at the maximum level; termination of employment for reasons other than disability or death will result in the award being immediately forfeited and canceled.
 
For performance grants, unless otherwise set forth in the agreement, if a participant’s employment with or service to Western Union terminates during the performance period by reason of disability, retirement or death, the performance period will continue and the participant (or the participant’s executor, administrator, legal representative, beneficiary or similar person, as applicable) may be entitled to a prorated award. The prorated award, if any, will be equal to the value of the award at the end of the performance period multiplied by a fraction, the numerator of which will equal the number of months the participant was employed with or performing services for Western Union during the performance period (fractional months will be ignored) and
 
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the denominator of which will equal the number of months in the performance period; provided, however, that such holder, or such holder’s executor, administrator, legal representative, beneficiary or similar person, as applicable, will not be entitled to payment or distribution of such performance grant earlier than the date set forth in the agreement. Unless the agreement specifies otherwise, if a participant’s employment with or service to Western Union terminates during the performance period for a reason other than disability, retirement or death, any unvested portion of the performance grant will be immediately forfeited.
 
Maximum Award.  To the extent necessary for an award to be qualified performance-based compensation under section 162(m) of the Internal Revenue Code, the maximum aggregate number of shares of common stock with respect to which stock options, SARs, restricted stock, restricted stock units, bonus stock awards or performance grants may be issued to any individual during a calendar year is one-half of one percent of the total number of outstanding shares of common stock of Western Union as of the preceding December 31 st . The maximum amount of cash payable during a calendar year to any person in connection with a performance grant is $8,000,000.
 
Change in Control.  As of the effective date of a change in control (a) each outstanding stock option and SAR granted under the 2006 LTIP shall become fully vested and exercisable, (b) the restriction period applicable to each outstanding restricted stock award or restricted stock unit award granted under the plan shall lapse, (c) the performance period applicable to any outstanding performance grant issued under the plan shall lapse, and (d) the performance measures applicable to any outstanding award under the plan shall be deemed to be satisfied at the target level (or if greater, at the performance level actually attained). Each stock option or SAR granted to a holder whose employment is terminated for an eligible reason according to the terms of the Western Union severance policy applicable to the holder as of the effective date of a change in control during the period commencing on and ending twenty-four months after the effective date of the change in control shall remain exercisable by such holder (or his or her legal representative or similar person) until the earlier of (y) the end of the severance period applicable to the holder under such severance policy or, if later, the end of the otherwise applicable post-termination exercise period, or (z) the expiration date of the term of the stock option or SAR.
 
Federal Income Tax Consequences.  A participant to whom a nonqualified stock option is granted will recognize no income at the time of the grant. When the participant exercises a nonqualified stock option, he or she will generally recognize ordinary income equal to the excess, if any, of the fair market value (determined as of the date of exercise) of the common stock received over the option exercise price. The tax basis of such shares to the participant will be equal to the exercise price paid plus the amount includable in his or her gross income as compensation. The holding period for purposes of determining whether a subsequent sale of such shares by the participant results in the recognition of short-term or long-term capital gain or loss will commence on the day after the date Western Union transfers the shares to the participant. A participant to whom a purchased stock option is granted will recognize no income at the time of grant. When the participant exercises a purchased stock option, he or she will generally recognize ordinary compensation income equal to the difference, if any, between the fair market value of the common stock he or she receives at such time and the sum of the exercise price for such shares.
 
A participant to whom an incentive stock option which qualifies under section 422 of the Internal Revenue Code is granted will generally recognize no income at the time of grant or at the time of exercise. However, upon the exercise of an incentive stock option, the excess of the fair market value of the common stock over the exercise price thereof may result in the participant being subject to an alternative minimum tax under applicable provisions of the Internal Revenue Code. In order to obtain incentive stock option treatment for federal income tax purposes, the participant (i) must be an employee of Western Union, a subsidiary of Western Union, or any of their respective affiliates continuously from the date of grant until any termination of employment and (ii) in the event of such a termination, must generally exercise an incentive stock option within three months after such termination. When a participant sells the common stock received upon exercise of an incentive stock option (more than one year after exercise and more than two years after the date of grant of such incentive stock option), he or she will normally recognize a long-term capital gain or loss equal to the difference, if any, between the sale
 
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price of such shares at such time and the exercise price. If the participant does not hold such shares for either period, when the participant sells such shares the participant will recognize ordinary compensation income equal to the lesser of (i) the difference, if any, between the fair market value of such shares on the date of exercise and the exercise price, or (ii) the difference, if any, between the sale price and the exercise price. Any other gain or loss on such sale (in addition to the ordinary income mentioned above), will normally be capital gain or loss. The tax basis of such shares to the participant, for purposes of computing such other gain or loss, should be equal to the exercise price paid (plus the amount includable in his gross income as compensation, if any).
 
The inclusion of SARs in a nonqualified stock option or an incentive stock option will normally not result in taxable income to the participant. At the time of exercise, the participant will normally recognize ordinary compensation income in an amount equal to the cash and the fair market value of the common stock he or she receives to satisfy his or her SAR. The tax basis of any such shares received by the participant pursuant to a SAR should be equal to the amount includable in his gross income as compensation in respect of such shares, and the participant’s holding period therefore should normally commence on the day on which he or she recognizes taxable income in respect of such shares.
 
A participant granted shares of restricted stock will not recognize taxable income at the time of grant and Western Union will not be allowed a deduction for federal income tax purposes at that time. However, a participant granted such shares may elect to recognize taxable compensation in the year of the grant in an amount equal to the fair market value of the shares at the time of grant by filing a “Section 83(b) election” to such effect with the Internal Revenue Service within 30 days after the date of grant. If shares with respect to which a participant has made the above-described Section 83(b) election are forfeited, no deduction will be allowed to the participant with respect to such forfeiture. If no Section 83(b) election is made, a participant granted shares of restricted stock will recognize taxable compensation in an amount equal to the fair market value of the shares at the time the shares first become transferable. Any dividends paid on shares of restricted stock prior to the date on which the participant recognizes taxable compensation with respect to the shares will be taxable to the participant as additional compensation rather than as ordinary dividends. Subject to a limit on the amount of compensation that can be deducted by Western Union for payments to its senior officers, Western Union will be allowed a deduction for federal income tax purposes at the time the holder of restricted stock recognizes taxable compensation equal to the amount of compensation recognized by such participant. A participant’s basis for shares of restricted stock will be the amount recognized as taxable compensation. A participant’s holding period for such shares will begin on the day after the date the participant recognizes taxable compensation with respect to the shares.
 
A person who has been granted a restricted stock unit award will not recognize taxable income on the date of grant and Western Union will not be entitled to a deduction at that time. When the restricted stock unit award vests and shares are transferred to the holder, the holder will recognize ordinary income in an amount equal to the fair market value of the transferred shares at such time less any cash consideration which the holder paid for the shares, and Western Union will be entitled to a corresponding deduction. Any gain or loss realized upon the holder’s sale or exchange of the shares will be treated as long-term or short-term capital gain or loss. The holder’s basis for the shares will be the amount recognized as taxable compensation plus any cash consideration which the holder paid for the shares. The holder’s holding period for the shares will begin on the day after the date the shares are transferred to the holder.
 
A person who has been granted a phantom stock unit will not recognize taxable income on the date of grant and Western Union will not be entitled to a deduction at that time. The recipient will have ordinary income when the cash or stock payment based on the performance of the common stock is payable to the participant upon vesting.
 
A participant to whom a performance grant award is made should recognize no taxable income at the time such award is made. The participant should recognize taxable income, however, at the time cash, common stock or other Western Union securities or property is paid to the participant pursuant to such award, and the amount of
 
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such income should be the amount of such cash and the fair market value at such time of such shares or securities, or property. The tax basis of any such shares, securities or property received by the participant pursuant to a performance grant award should be equal to the amount includable in the participant’s gross income as compensation in respect of such shares, securities or property, and the holding period therefor should normally commence on the day following the date on which the participant recognizes taxable income in respect of such shares, securities or property. Any income equivalents paid to a recipient with respect to his or her performance grant award should generally be regarded for federal income tax purposes as compensation. A participant who receives a bonus stock award will recognize taxable income at the time the bonus stock is awarded.
 
If the participant is subject to section 16 of the Exchange Act, the tax consequences may be different than those described above. Generally, such a participant will not recognize income on receipt of property such as common stock until he or she is no longer subject to liability with respect to the disposition of such common stock. However, by filing an election under section 83(b) of the Internal Revenue Code with the Internal Revenue Service no later than 30 days after the date of transfer of property, such a participant may elect to be taxed at the time of such transfer.
 
Any compensation includable in the gross income of a recipient will be subject to appropriate federal income tax withholding.
 
The company for which a participant is performing services will generally be allowed to deduct amounts that are includable in the income of the participant as ordinary compensation income at the time such amounts are so includable, provided that the amounts qualify as reasonable compensation for personal services actually rendered.
 
The discussion set forth above is a brief overview of certain United States federal income tax consequences of awards made under the 2006 LTIP. This overview should not be relied upon as being a complete description of the applicable United States federal income tax consequences. In addition, this overview does not address the state, local, foreign or other tax aspects of awards made under the 2006 LTIP or the effect on such awards of guidance that may be issued by the United States Treasury under section 409A of the Internal Revenue Code.
 
Retirement Savings Plans
 
Certain of our union employees participate in the Western Union Financial Services, Inc. Retirement Savings Plan for Bargaining Unit Employees (the “Western Union Financial Services 401(k) Plan”). Effective as of the time of distribution, the obligations and assets of the Western Union Financial Services 401(k) Plan will be transferred to a trust maintained by Western Union. The Western Union Financial Services 401(k) Plan is a tax qualified plan under section 401 of the Internal Revenue Code. The Western Union Financial Services 401(k) Plan permits participants to make pre-tax deferrals of up to 16% of their eligible compensation. Under the Western Union Financial Services 401(k) Plan, we make contributions of 4% of eligible employee compensation. In addition, union employees who make voluntary contributions receive up to a 1.5% matching contribution and a $650 per employee lump-sum contribution per year. In general, participants become vested in these matching and additional contributions over a five-year service period.
 
Effective as of the time of spin-off, we expect to adopt a defined contribution retirement plan (the “Western Union 401(k) Plan”) for our United States non-union employees, including our executive officers, which will be structured with the intention of qualifying under section 401(a) of the Internal Revenue Code. Under the Western Union 401(k) Plan, participants will be permitted to make pre-tax deferrals of up to the maximum allowable amount under the Internal Revenue Code. In addition, we will make matching contributions equal to 100% of the first 3% of eligible compensation deferred and 50% of the next 2% of eligible compensation deferred.
 
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Supplemental Retirement Plan
 
Effective as of the time of distribution, we expect to adopt a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) to provide participants with a contribution equal to the difference between the contributions payable to a participant under our 401(k) plan, calculated without regard to the annual benefit and compensation limitations imposed by the Internal Revenue Code, and the maximum contribution allowable to the participant under our 401(k) plan. The Deferred Compensation Plan will be unfunded. Each of the named executive officers will be eligible to participate in the Deferred Compensation Plan.
 
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 OWNERSHIP OF OUR STOCK
 
The following table sets forth the anticipated beneficial ownership of our common stock immediately following the distribution date by each of our directors and named executive officers, and all directors and executive officers as a group, based upon information available to us concerning ownership of First Data common stock on May 15, 2006 (and assuming a distribution ratio of one share of our common stock for each share of First Data common stock except for shares representing First Data stock based awards). The mailing address of each of these individuals is c/o The Western Union Company, 12500 East Belford Avenue, Englewood, CO 80112. As used in this information statement, “beneficial ownership” means that a person has, or may have within 60 days, the sole or shared power to vote or direct the voting of a security and/or the sole or shared investment power with respect to a security (i.e., the power to dispose or direct the disposition of a security). It is expected that, subject to approval by First Data’s compensation and benefits committee, in connection with the spin-off, First Data stock based awards held by these individuals will be replaced with our stock-based awards pursuant to the First Data Corporation 1992 and 2002 Long-Term Incentive Plans and 1993 Director Stock Option Plan. The number of shares of First Data restricted stock and shares of First Data common stock covered by options subject to replacement will not equal the number of shares of Western Union restricted stock and shares of Western Union common stock covered by options to be issued to each individual upon completion of the spin-off. Pursuant to the employee matters agreement, (i) the number of shares of Western Union stock purchasable and the exercise price under a Western Union substitute option will be adjusted from the terms of the First Data option to preserve the intrinsic value of the First Data option and the ratio of the exercise price to the fair market value of the First Data common stock and (ii) the number of substitute shares of Western Union restricted stock under a replacement restricted stock award will be adjusted to preserve the intrinsic value of the First Data restricted stock award being replaced. Based on ownership of First Data common stock as of May 15, 2006, no person is expected to be a beneficial owner of five percent or more of our common stock immediately following the distribution date.

Name	  	Shares to
be Owned(1)	 	 	First Data Restricted
Stock Owned Subject
to Replacement(1)	 	 	First Data Options
Beneficially Owned
Subject to
Replacement(1)	 	 	Percent of
Class(2)	
Richard D. Badler	  	0	 	 	0	 	 	0	 	 	*	
David G. Barnes	  	[	· ]	 	[	· ]	 	[	· ]	 	*	
Guy A. Battista	  	2,893	 	 	76,250	 	 	588,332	 	 	*	
Royal W. Cole	  	103	 	 	1,545	 	 	107,450	 	 	*	
Hikmet Ersek	  	1,324	 	 	2,184	 	 	167,698	 	 	*	
Christina A. Gold	  	11,528	(3)	 	87,500	 	 	475,000	 	 	*	
Jack M. Greenberg	  	1,514	 	 	0	 	 	86,646	 	 	*	
Robin S. Heller	  	1,529	 	 	1,669	 	 	164,350	 	 	*	
Ian K. Marsh	  	0	 	 	1,708	 	 	55,000	 	 	*	
Scott T. Scheirman	  	665	 	 	1,655	 	 	182,240	 	 	*	
David L. Schlapbach	  	176	 	 	1,765	 	 	70,000	 	 	*	
William D. Thomas	  	0	 	 	3,310	 	 	0	 	 	*	
Grover Wray	  	0	 	 	1,269	 	 	30,000	 	 	*	
Dinyar S. Devitre	  	0	 	 	0	 	 	0	 	 	*	
Betsy D. Holden	  	0	 	 	0	 	 	0	 	 	*	
Alan J. Lacy	  	0	 	 	0	 	 	0	 	 	*	
Roberto G. Mendoza	  	0	 	 	0	 	 	0	 	 	*	
Michael A. Miles	  	0	 	 	0	 	 	0	 	 	*	
All directors and executive officers as a group (18 persons)	  	19,732	 	 	178,855	 	 	1,926,716	 	 	*	

(1)	Except as otherwise noted, the directors and named executive officers, and all directors and executive officers as a group, have sole voting power and sole investment power over the shares listed.	
 
(2)	An asterisk indicates that the percentage of common stock projected to be beneficially owned by the named individual does not exceed one percent of our common stock.	
 
(3)	Includes 20 shares held by Ms. Gold’s husband in a broker-directed account.	
 
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 DESCRIPTION OF OUR CAPITAL STOCK
 
Introduction
 
The following is a summary of information concerning our capital stock. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our certificate of incorporation and our by-laws, and are entirely qualified by those documents, which you must read for complete information on the terms of our capital stock and which are included as exhibits to the registration statement of which this information statement is a part.
 
Authorized Capital Stock
 
Immediately following the spin-off, our authorized capital stock will consist of 2,000,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. Based on approximately [•] shares of First Data common stock that we expect to be outstanding on the record date, approximately [•] shares of our common stock will be outstanding immediately following the spin-off. All of the shares of our common stock distributed to First Data stockholders in the spin-off will be validly issued, fully paid and non-assessable.
 
Common Stock
 
The holders of our common stock are entitled to one vote per share of common stock held on all matters voted on by our stockholders, including the election of directors, and except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of funds legally available for that purpose. See “Dividend Policy.” In the event of our liquidation, dissolution or winding up, subject to preferences that may be applicable to any outstanding preferred stock, the holders of our common stock would be entitled to share ratably in all assets available for distribution to stockholders.
 
The holders of our common stock have no preemptive rights. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of any outstanding preferred stock.
 
We have applied to have our common stock authorized for listing on the New York Stock Exchange under the symbol “WU.”
 
Wells Fargo Bank Minnesota, National Association will serve as the transfer agent and registrar for our common stock.
 
Preferred Stock
 
Our certificate of incorporation will authorize our board of directors, without the approval of our stockholders, to fix the designation, powers, preferences and rights of one or more series of preferred stock, which may be greater than those of our common stock.
 
We believe that the ability of our board of directors to issue one or more series of preferred stock will provide us with flexibility in structuring possible future financings and acquisitions and in meeting other corporate needs that might arise.
 
The issuance of shares of our preferred stock, or the issuance of rights to purchase shares of preferred stock, could be used to satisfy certain regulatory requirements or to discourage an unsolicited acquisition proposal. See
 
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“Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-Laws.” In addition, under some circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock.
 
Immediately following the spin-off, no shares of preferred stock will be outstanding and we have no present plans to issue any shares of our preferred stock.
 
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 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
First Data has historically provided us with a number of corporate functions, including many shared services that we benefit from such as treasury, tax, accounting and reporting, mergers and acquisitions, risk management, legal, internal audit, procurement, human resources, investor relations and information technology. We also participate in certain First Data insurance, benefit and incentive plans, and receive services directly related to the operations of our businesses, such as call center services, credit card processing, printing and mailing. First Data and its affiliates charged us $97.1 million and $87.2 million for these services in the six months ended June 30, 2006 and 2005, respectively, and $166.3 million, $158.3 million and $142.2 million for these services in the years ended December 31, 2005, 2004 and 2003, respectively.
 
As of December 31, 2005 and 2004, we had notes payable to First Data of approximately $163.5 million and $9.9 million, respectively. These notes bear interest at rates ranging from 3.89% to 8.375% annually. As of December 31, 2005 and 2004, we had notes receivable from First Data of approximately $751.5 million and $278.2 million, respectively. These notes bear interest at rates ranging from 3.45% to 7.0% annually. As noted elsewhere in this information statement, we expect that all notes between us, on the one hand, and First Data, on the other hand, will be paid in connection with the spin-off. Certain of these notes receivable also have related foreign currency swap arrangements to mitigate the foreign exchange impact to us of certain euro denominated notes receivable with affiliates. The fair market value of these swaps is recorded in “Receivables from affiliated companies, net” in our combined balance sheets and will be settled in cash along with the related notes receivable in connection with the spin-off.
 
During the years ended December 31, 2005, 2004 and 2003, we received transaction fee and commission revenue from IPS in connection with the sale and distribution of money orders through its agent network of approximately $63.9 million, $60.5 million and $61.4 million, respectively.
 
We have ownership interests in certain of our agents, all of which are accounted for under the equity method of accounting. We pay these agents, as we do our other agents, commissions for money transfer and other services provided on our behalf. Commissions paid to these agents, from the date of investment, for the six months ended June 30, 2006 and 2005 totaled $99.4 million and $84.0 million, respectively, and for the years ended December 31, 2005, 2004 and 2003 totaled $177.7 million, $105.1 million and $69.0 million, respectively.
 
Also, in connection with the spin-off, we will enter into certain other agreements with First Data to define our ongoing relationship with First Data after the spin-off. These other agreements will define responsibility for obligations arising before and after the distribution date, including, among others, obligations relating to our employees, certain transition services and taxes. See “Our Relationship with First Data After the Spin-Off.”
 
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 CERTAIN ANTI-TAKEOVER EFFECTS OF PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS
 
Some provisions of our certificate of incorporation and by-laws will contain certain provisions that could make the acquisition of our company by means of a tender offer, proxy contest or otherwise more difficult. These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions also are designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire us and outweigh the disadvantages of discouraging those proposals because negotiation of them could result in an improvement in their terms.
 
Certificate of Incorporation and By-Laws
 
The following is a summary of information concerning our certificate of incorporation and by-laws as they will be in effect immediately following the spin-off. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our certificate of incorporation and our by-laws, and are entirely qualified by those documents, which you must read for complete information on the terms of our certificate of incorporation and by-laws and which are included as exhibits to the registration statement of which this information statement is a part.
 
Classified board of directors
 
Our certificate of incorporation will provide that our board of directors will be divided into three classes as nearly equal in number as possible. Class I will initially be elected for a one year term, Class II will initially be elected for a two year term and Class III will initially be elected for a three year term. At each succeeding annual meeting of stockholders beginning in 2007, successors to the class of directors will serve for a three-year term, with each director to hold office until his successor is duly elected and qualified. This structure of electing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because the staggered terms, together with the removal and vacancy provisions of our certificate of incorporation discussed below, would make it more difficult for a potential acquirer to gain control of our board of directors.
 
Number of Directors; Filling Vacancies; Removal
 
Our certificate of incorporation will provide that the number of directors will be between one and fifteen and our board of directors will fix the exact number of directors to comprise our board of directors. A director may only be removed from office for cause by the affirmative vote of holders of a majority of shares of common stock entitled to vote at an election of directors. Additionally, only our board of directors will be authorized to fill any vacancies resulting in our board of directors. As discussed above, these provisions, in combination with the classified board of directors, have the effect of making it difficult for a potential acquirer to gain control of our board of directors.
 
No Stockholder Action by Written Consent; Special Meetings
 
Our certificate of incorporation will provide that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing of such stockholders. Further, our by-laws will provide that special meetings may be called only by the chairman of our board of directors, our chief executive officer, our president, our secretary or any officer at the request of our board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the entire board of directors. These provisions may have the effect of delaying consideration of a stockholder proposal until the next annual meeting unless a special meeting is called by an officer at the request of our board of directors or one of the other persons named above.
 
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Advance Notice of Stockholder Nominations and Stockholder Proposals
 
Our by-laws will have advance notice procedures for stockholders to make nominations of candidates for election as directors or to bring other business before a meeting of the stockholders. The business to be conducted at an annual meeting will be limited to (i) business specified in the notice of meeting (or supplement to the notice) given by or at the direction of our board of directors or a duly authorized committee thereof or (ii) business properly brought before the annual meeting by or at the direction of our board of directors or a duly authorized committee thereof or by a stockholder of record who has given timely written notice to our secretary of that stockholder’s intention to bring such business before such meeting.
 
Our by-laws will govern stockholder nominations of candidates for election as directors except with respect to the rights of holders of our preferred stock. Under our by-laws, nominations of persons for election to our board of directors may be made at an annual meeting by a stockholder of record on the date of giving notice to our secretary and as of the record date for the determination of stockholders entitled to vote at the meeting if the stockholder submits a timely notice of nomination. A notice of a stockholder nomination will be timely only if it is delivered to us at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. However, if the annual meeting is called for a date that is not within 30 days prior to or after that anniversary date (or if there has not been an annual meeting in the previous year), notice by the stockholder must be received not later than the close of business on the 10 th day following the earlier of the day on which such notice of the date of the annual meeting was mailed or the day of public disclosure of the date of the annual meeting was made.
 
The notice of a stockholder nomination must contain specified information, including, without limitation:
 
 	•	 	the name and address of the stockholder of record making the nomination;	
 
 	•	 	the class or series and number of shares of capital stock owned beneficially or of record by the stockholder;	
 
 	•	 	a description of all arrangements or understandings between the stockholder and each candidate to serve as a director and any other person pursuant to which such nomination is made by the stockholder;	
 
 	•	 	a representation that the stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in its notice;	
 
 	•	 	the name, age, business and residence addresses and principal occupation or employment of the stockholder’s candidate;	
 
 	•	 	the class or series and number of shares of capital stock owned beneficially or of record by the stockholder’s candidate;	
 
 	•	 	the consent of each candidate to serve as a director if so elected; and	
 
 	•	 	such other information that would be required to be included in a proxy statement or other filings pursuant to the proxy rules of the SEC.	
 
Our by-laws will govern the notification process of all other stockholder proposals to be brought before an annual meeting. Under our by-laws, notice of a stockholder proposal will be timely only if it is delivered to us at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders. However, if the annual meeting is called for a date that is not within 30 days prior to or after that anniversary date (or if there has not been an annual meeting in the previous year), notice by the stockholder must be received not later than the close of business on the 10 th day following the earlier of the day on which such notice of the date of the annual meeting was mailed or the day of public disclosure of the date of the annual meeting was made.
 
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The notice of a stockholder proposal must contain specified information, including, without limitation:
 
 	•	 	a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;	
 
 	•	 	the name and address of the stockholder of record making the proposal;	
 
 	•	 	the class or series and number of shares of capital stock owned beneficially or of record by the stockholder;	
 
 	•	 	a description of all arrangements or understandings between the stockholder and any other person in connection with the proposal of such business by the stockholder and any material interest of the stockholder in the business; and	
 
 	•	 	a representation that the stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the annual meeting.	
 
If the chairman of the meeting determines that the stockholder nomination or proposal was not properly brought before the meeting in accordance with the provisions of our certificate of incorporation or by-laws, as the case may be, that person will not be eligible for election as a director or that business will not be conducted at the meeting, as the case may be.
 
The advance notice provisions may preclude a contest for the election of directors or the consideration of stockholder proposals if the proper procedures are not followed. Additionally, the advance notice provisions may deter a third party from conducting a solicitation to elect its own slate of directors or approve its own proposal, without regard to whether consideration of those nominees or proposals might be harmful or beneficial to us and our stockholders.
 
Preferred Stock
 
Our certificate of incorporation will authorize our board of directors, without the approval of our stockholders, to provide for the issuance of all or any shares of our preferred stock in one or more classes or series and to fix the designation, powers, preferences, rights, qualifications, limitations or restrictions of such series of preferred stock, which may be greater than those of our common stock. The issuance of shares of our preferred stock, or the issuance of rights to purchase shares of preferred stock, could be used to discourage an unsolicited acquisition proposal. In addition, under some circumstances, the issuance of preferred stock could adversely affect the voting power of our common stockholders.
 
Amendment of the Certificate of Incorporation and By-Laws
 
Under Delaware law, the stockholders of a corporation have the right to adopt, amend or repeal the by-laws and, with the approval of the board of directors, the certificate of incorporation of a corporation. In addition, under Delaware law, if the certificate of incorporation so provides, the by-laws may be adopted, amended or repealed by the board of directors.
 
Under Delaware law, the affirmative vote of the holders of a majority of the voting power of all shares of capital stock entitled to vote on the amendment will be required to amend our certificate of incorporation. Our certificate of incorporation also will provide that our board of directors may amend our by-laws.
 
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 LIMITATION OF LIABILITY AND INDEMNIFICATION
OF OUR DIRECTORS AND OFFICERS
 
Limitation of Liability of Directors
 
Our certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of their fiduciary duties as directors, except for liability:
 
 	•	 	for any breach of their duty of loyalty to the corporation or its stockholders;	
 
 	•	 	for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;	
 
 	•	 	under Section 174 of the Delaware General Corporation Law relating to unlawful payments of dividends or unlawful stock repurchases or redemptions; or	
 
 	•	 	for any transaction from which the director derived an improper personal benefit.	
 
The limitation of liability does not apply to liabilities arising under the federal or state securities laws and does not affect the availability of equitable remedies, such as injunctive relief or rescission.
 
Indemnification of Officers and Directors
 
Our certificate of incorporation provides that each person who was or is a director shall be indemnified to the fullest extent permitted by Delaware law and further provides that we may, to the extent deemed appropriate by our board of directors and as authorized under Delaware law, indemnify any officers, employees and agents of Western Union. Our by-laws provide that each person who is, or was an officer or employee of Western Union, and each person who is, or was, serving at our request as an officer or employee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, will be indemnified by us, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of Western Union, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The certificate of incorporation provides that this right to indemnification will not be exclusive of any other right which any person may otherwise have or acquire. The certificate of incorporation also permits us to secure and maintain insurance on behalf of any director, officer, employee or agent of Western Union and each person who is, or was, serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against and incurred by such person in any such capacity.
 
We intend to obtain directors’ and officers’ liability insurance providing coverage to our directors and officers. In addition, we intend to enter into indemnification agreements with each of our outside directors. See “Our Management—Compensation of Directors—Indemnification Agreements.”
 
 2007 ANNUAL MEETING OF STOCKHOLDERS
 
Our by-laws provide that an annual meeting of stockholders will be held each year on a date specified by our Board of Directors. The first annual meeting of our stockholders after the distribution is expected to be held in [•] of 2007. In order to be considered for inclusion in our proxy materials for the 2007 annual stockholders meeting, any proposals by stockholders must be received at our principal executive offices at The Western Union Company, Attn: Corporate Secretary, [•] prior to [•], 2007. We anticipate commencing the mailing of proxies for the 2007 annual stockholders meeting in [•] 2007. In addition, stockholders at the 2007 annual stockholders meeting may consider nominations for the election of directors brought by a stockholder of record on the record date for the meeting who is entitled to vote at such meeting and who has complied with the advance notice procedures established by our by-laws. A stockholder nomination for the election of directors intended to be
 
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brought before the 2007 annual stockholders meeting must be received by our corporate secretary on or after [•], 2007 and on or prior to [•], 2007. See “Certain Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-Laws.”
 
 WHERE YOU CAN FIND MORE INFORMATION
 
We have filed with the SEC a registration statement, of which this information statement constitutes a part, under the Exchange Act with respect to our common stock being received by First Data stockholders in the spin-off. This information statement does not contain all of the information set forth in the registration statement. For further information with respect to our business and our common stock being received by First Data stockholders in the spin-off, please refer to the registration statement. While we have provided a summary of the material terms of certain agreements and other documents, the summary does not describe all of the details of the agreements and other documents. In each instance where a copy of an agreement or other document has been filed as an exhibit to the registration statement, please refer to the registration statement. Each statement in this information statement regarding an agreement or other document is qualified in all respects by such exhibit. You may read and copy all or any portion of the registration statement at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. The SEC maintains a Web site, http://www.sec.gov, that contains reports, proxy and information statements and other information regarding registrants, such as First Data and Western Union, that file electronically with the SEC. Upon effectiveness of our registration statement on Form 10 of which this information statement forms a part, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference rooms and the SEC’s Web site.
 
You also can find additional information about First Data and Western Union at www.firstdata.com and www.westernunion.com, respectively. The information contained in those websites does not constitute a part of this information statement.
 
We intend to furnish our stockholders with annual reports containing consolidated financial statements (beginning with the year ending December 31, 2006) audited by our independent registered public accounting firm.
 
You should rely only on the information contained in this information statement and other documents referred to in this information statement. Neither we nor First Data has authorized anyone to provide you with information that is different. This information statement is being furnished by First Data solely to provide information to First Data stockholders who will receive our common stock in the distribution. It is not, and it is not to be construed as, an inducement or encouragement to buy or sell any securities of First Data or Western Union. We and First Data believe that the information presented herein is accurate as of the date hereof. Changes will occur after the date of this information statement, and neither we nor First Data will update the information except to the extent required in the normal course of our respective public disclosure practices and as required pursuant to the federal securities laws.
 
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  THE WESTERN UNION COMPANY
Index To Combined Financial Statements and Schedule

Report of Independent Registered Public Accounting Firm	  	F-2	
Combined Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005 and 2004	  	F-3	
Combined Statements of Income for the six months ended June 30, 2006 and 2005 (unaudited) and for each of the three years in the period ended December 31, 2005	  	F-4	
Combined Statements of Cash Flows for the six months ended June 30, 2006 and 2005 (unaudited) and for each of the three years in the period ended December 31, 2005	  	F-5	
Combined Statements of Net Investment in The Western Union Company for each of the three years in the period ended December 31, 2005 and for the six months ended June 30, 2006 (unaudited)	  	F-6	
Notes to Combined Financial Statements	  	F-7	
Schedule II—Valuation and Qualifying Accounts	  	F-40	
 
All other financial statement schedules for The Western Union Company have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the respective financial statements or notes thereto.
 
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Table of Contents
 Report of Independent Registered Public Accounting Firm
 
The Stockholders and Board of Directors of
First Data Corporation
 
We have audited the accompanying Combined Balance Sheets of The Western Union Company as of December 31, 2005 and 2004, and the related Combined Statements of Income, Net Investment in The Western Union Company, and Cash Flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in the Index to Combined Financial Statements and Schedule at page F-1. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of The Western Union Company at December 31, 2005 and 2004, and the combined results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
 
As described in Note l, the financial statements referred to above have been restated.
 
/s/ Ernst & Young LLP
 
Denver, Colorado
June 1, 2006, except for Notes 1 and 14,
as to which the date is August 22, 2006
 
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Table of Contents
 THE WESTERN UNION COMPANY
Combined Balance Sheets
(Dollars in millions, except per share amounts)

 	  	June 30,
2006	 	 	Pro Forma
June 30,
2006	 	 	December 31,	 	
 	  			 			 	2005	 	 	2004	 	
 	  	(unaudited)	 	 	(unaudited)	 	 	(restated)	 	 	(restated)	 	
Assets	  				 				 				 				
Cash and cash equivalents	  	$	655.8	 	 	$	1,395.8	 	 	$	510.2	 	 	$	469.7	 	
Settlement assets	  	 	982.1	 	 	 	982.1	 	 	 	929.1	 	 	 	716.9	 	
Receivables from affiliated companies, net	  	 	167.2	 	 	 	—  	 	 	 	192.8	 	 	 	42.6	 	
Notes receivable from affiliated companies	  	 	778.8	 	 	 	—  	 	 	 	751.5	 	 	 	278.2	 	
Property and equipment, net	  	 	89.4	 	 	 	154.9	 	 	 	82.4	 	 	 	70.7	 	
Goodwill	  	 	1,599.3	 	 	 	1,599.3	 	 	 	1,618.0	 	 	 	1,343.6	 	
Other intangible assets, net	  	 	232.9	 	 	 	232.9	 	 	 	180.4	 	 	 	119.9	 	
Other assets	  	 	490.1	 	 	 	504.5	 	 	 	342.0	 	 	 	288.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total assets	  	$	4,995.6	 	 	$	4,869.5	 	 	$	4,606.4	 	 	$	3,330.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities and net investment in The Western Union Company (stockholders’ deficiency)	  				 				 				 				
Liabilities:	  				 				 				 				
Accounts payable and accrued liabilities	  	$	220.5	 	 	$	387.6	 	 	$	238.6	 	 	$	218.2	 	
Settlement obligations	  	 	980.9	 	 	 	980.9	 	 	 	926.7	 	 	 	711.0	 	
Pension obligations	  	 	68.9	 	 	 	68.9	 	 	 	69.8	 	 	 	82.9	 	
Deferred tax liability, net	  	 	269.5	 	 	 	269.5	 	 	 	248.1	 	 	 	204.5	 	
Notes payable to affiliated companies	  	 	63.5	 	 	 	—  	 	 	 	163.5	 	 	 	9.9	 	
Other liabilities	  	 	138.8	 	 	 	138.8	 	 	 	147.9	 	 	 	169.2	 	
Debt	  	 	—  	 	 	 	3,600.0	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities	  	 	1,742.1	 	 	 	5,445.7	 	 	 	1,794.6	 	 	 	1,395.7	 	
					
Commitments and contingencies (Notes 11 and 12)	  				 				 				 				
					
Net investment in The Western Union Company (stockholders’ deficiency):	  				 				 				 				
Preferred stock, $0.01 par value; 10 shares authorized pro forma; no shares issued and outstanding pro forma	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
Common stock, $0.01 par value; 2,000 shares authorized pro forma; 765.2 shares issued and outstanding pro forma	  	 	—  	 	 	 	7.7	 	 	 	—  	 	 	 	—  	 	
Capital deficiency	  	 	—  	 	 	 	(524.8	)	 	 	—  	 	 	 	—  	 	
Net investment in The Western Union Company	  	 	3,312.6	 	 	 	—  	 	 	 	2,873.9	 	 	 	1,994.5	 	
Accumulated other comprehensive loss	  	 	(59.1	)	 	 	(59.1	)	 	 	(62.1	)	 	 	(60.0	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total net investment in The Western Union Company (stockholders’ deficiency)	  	 	3,253.5	 	 	 	(576.2	)	 	 	2,811.8	 	 	 	1,934.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities and net investment in The Western Union Company (stockholders’ deficiency)	  	$	4,995.6	 	 	$	4,869.5	 	 	$	4,606.4	 	 	$	3,330.2	 	

 
See accompanying notes.
 
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Table of Contents
 THE WESTERN UNION COMPANY
Combined Statements of Income
(Dollars in millions)

 	  	Six Months
Ended
June 30,	 	 	Year Ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
 	  	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Revenues:	  				 				 				 				 				
Transaction fees	  	$	1,791.6	 	 	$	1,604.2	 	 	$	3,354.8	 	 	$	3,006.1	 	 	$	2,679.0	 	
Foreign exchange revenue	  	 	309.6	 	 	 	248.6	 	 	 	531.0	 	 	 	449.6	 	 	 	380.9	 	
Commission and other revenues	  	 	55.4	 	 	 	47.6	 	 	 	102.1	 	 	 	91.9	 	 	 	91.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	2,156.6	 	 	 	1,900.4	 	 	 	3,987.9	 	 	 	3,547.6	 	 	 	3,151.6	 	
Expenses:	  				 				 				 				 				
Cost of services	  	 	1,153.4	 	 	 	995.3	 	 	 	2,118.9	 	 	 	1,859.4	 	 	 	1,618.6	 	
Selling, general and administrative	  	 	364.1	 	 	 	292.5	 	 	 	599.8	 	 	 	576.1	 	 	 	530.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total expenses *	  	 	1,517.5	 	 	 	1,287.8	 	 	 	2,718.7	 	 	 	2,435.5	 	 	 	2,148.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	639.1	 	 	 	612.6	 	 	 	1,269.2	 	 	 	1,112.1	 	 	 	1,003.0	 	
Derivative (losses)/gains, net	  	 	(27.2	)	 	 	36.8	 	 	 	45.8	 	 	 	(30.2	)	 	 	(37.9	)	
Foreign exchange effect on notes receivable from affiliates, net	  	 	(4.1	)	 	 	(9.8	)	 	 	(5.9	)	 	 	7.5	 	 	 	—  	 	
Interest income from affiliates, net	  	 	23.5	 	 	 	9.2	 	 	 	24.3	 	 	 	9.1	 	 	 	—  	 	
Other income/(expense), net	  	 	17.4	 	 	 	5.8	 	 	 	10.7	 	 	 	0.1	 	 	 	(2.5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	648.7	 	 	 	654.6	 	 	 	1,344.1	 	 	 	1,098.6	 	 	 	962.6	 	
Provision for income taxes	  	 	210.0	 	 	 	203.0	 	 	 	416.7	 	 	 	347.0	 	 	 	328.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	438.7	 	 	$	451.6	 	 	$	927.4	 	 	$	751.6	 	 	$	633.7	 	

*	As further described in Note 3, total expenses include amounts paid to related parties of $196.5 million and $171.2 million for the six months ended June 30, 2006 and 2005, respectively, and $344.0 million, $263.4 million and $211.2 million for the years ended December 31, 2005, 2004 and 2003, respectively.	

 
See accompanying notes.
 
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Table of Contents
 THE WESTERN UNION COMPANY
Combined Statements of Cash Flows
(Dollars in millions)

 	 	Six Months Ended
June 30,	 	 	Year Ended December 31,	 	
 	 	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
 	 	 	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	 	(restated)	 	
 	 	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Cash flows from operating activities	 				 				 				 				 				
Net income	 	$	438.7	 	 	$	451.6	 	 	$	927.4	 	 	$	751.6	 	 	$	633.7	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 				 				 				 				 				
Depreciation and amortization	 	 	49.1	 	 	 	39.0	 	 	 	79.5	 	 	 	79.2	 	 	 	78.4	 	
Deferred income tax provision	 	 	21.5	 	 	 	18.2	 	 	 	24.9	 	 	 	47.6	 	 	 	63.3	 	
Realized (gain)/loss on derivative instruments	 	 	(7.9	)	 	 	7.7	 	 	 	0.5	 	 	 	23.2	 	 	 	30.8	 	
Other non-cash items, net	 	 	18.9	 	 	 	8.9	 	 	 	25.8	 	 	 	13.9	 	 	 	18.7	 	
Increase (decrease) in cash, excluding the effects of acquisitions and dispositions, resulting from changes in:	 				 				 				 				 				
Other assets	 	 	(39.4	)	 	 	(9.1	)	 	 	(8.8	)	 	 	(13.8	)	 	 	(27.5	)	
Accounts payable and accrued liabilities	 	 	(10.4	)	 	 	(14.2	)	 	 	(17.9	)	 	 	(6.3	)	 	 	(11.8	)	
Other liabilities	 	 	11.4	 	 	 	(34.2	)	 	 	(28.6	)	 	 	34.8	 	 	 	7.2	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	481.9	 	 	 	467.9	 	 	 	1,002.8	 	 	 	930.2	 	 	 	792.8	 	
						
Cash flows from investing activities	 				 				 				 				 				
Capitalization of contract costs	 	 	(79.9	)	 	 	(3.7	)	 	 	(22.5	)	 	 	(7.3	)	 	 	(57.7	)	
Capitalization of software development costs	 	 	(2.0	)	 	 	(1.8	)	 	 	(7.7	)	 	 	(15.7	)	 	 	(18.5	)	
Purchases of property and equipment	 	 	(32.5	)	 	 	(14.2	)	 	 	(34.8	)	 	 	(26.5	)	 	 	(23.6	)	
Notes receivable issued to agents	 	 	(140.0	)	 	 	(4.4	)	 	 	(8.4	)	 	 	—  	 	 	 	—  	 	
Acquisition of businesses, net of cash acquired, and contingent purchase consideration paid	 	 	—  	 	 	 	—  	 	 	 	(349.1	)	 	 	(28.7	)	 	 	(43.7	)	
Cash received (paid) on maturity of foreign currency forwards	 	 	7.9	 	 	 	(7.7	)	 	 	(0.5	)	 	 	(23.2	)	 	 	(30.8	)	
Purchase of equity method investments	 	 	—  	 	 	 	(5.4	)	 	 	(5.4	)	 	 	(42.0	)	 	 	—  	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(246.5	)	 	 	(37.2	)	 	 	(428.4	)	 	 	(143.4	)	 	 	(174.3	)	
						
Cash flows from financing activities	 				 				 				 				 				
Advances from (to) affiliated companies	 	 	17.7	 	 	 	(282.8	)	 	 	(153.2	)	 	 	250.0	 	 	 	(359.0	)	
Capital contributed by parent in connection with acquisitions	 	 	—  	 	 	 	—  	 	 	 	369.2	 	 	 	28.7	 	 	 	44.1	 	
Proceeds from notes payable issued to affiliated companies	 	 	—  	 	 	 	—  	 	 	 	400.1	 	 	 	255.0	 	 	 	9.9	 	
Repayments of notes payable to affiliated companies	 	 	(100.0	)	 	 	—  	 	 	 	(246.5	)	 	 	(255.0	)	 	 	—  	 	
Additions to notes receivable from affiliated companies	 	 	(7.5	)	 	 	(25.1	)	 	 	(504.7	)	 	 	(270.7	)	 	 	—  	 	
Proceeds from repayments of notes receivable from affiliated companies	 	 	—  	 	 	 	—  	 	 	 	18.4	 	 	 	—  	 	 	 	—  	 	
Dividends to parent company	 	 	—  	 	 	 	—  	 	 	 	(417.2	)	 	 	(659.8	)	 	 	(324.2	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in financing activities	 	 	(89.8	)	 	 	(307.9	)	 	 	(533.9	)	 	 	(651.8	)	 	 	(629.2	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	 	 	145.6	 	 	 	122.8	 	 	 	40.5	 	 	 	135.0	 	 	 	(10.7	)	
Cash and cash equivalents at beginning of period	 	 	510.2	 	 	 	469.7	 	 	 	469.7	 	 	 	334.7	 	 	 	345.4	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	 	$	655.8	 	 	$	592.5	 	 	$	510.2	 	 	$	469.7	 	 	$	334.7	 	

Supplemental cash flow information	 				 				 				 				 				
Interest paid	 	$	1.3	 	 	$	0.1	 	 	$	3.5	 	 	$	5.5	 	 	$	0.1	 	
Income taxes paid (primarily to parent company)	 	 	188.5	 	 	 	184.8	 	 	 	391.8	 	 	 	299.4	 	 	 	265.6	 	
 
See accompanying notes.
 
F-5

Table of Contents
 THE WESTERN UNION COMPANY
Combined Statements of Net Investment in The Western Union Company
(Dollars in millions)

 	 	Net Investment
in The Western
Union Company	 	 	Accumulated
Other
Comprehensive
Income (Loss)	 	 	Total Net
Investment in The
Western Union
Company	 	 	Comprehensive
Income (loss)	 	
Balance at December 31, 2002	 	$	1,530.4	 	 	$	(59.7	)	 	$	1,470.7	 	 				
Cumulative effect of restatement	 	 	(10.0	)	 	 	10.0	 	 	 	—  	 	 				
	 	 	 	 	 	 	 	 	 	 	 	 	 				
Balance at December 31, 2002 (restated)	 	 	1,520.4	 	 	 	(49.7	)	 	 	1,470.7	 	 				
Net Income (restated)	 	 	633.7	 	 				 	 	633.7	 	 	$	633.7	 	
Dividends	 	 	(324.2	)	 				 	 	(324.2	)	 				
Capital contributed by parent in connection with acquisitions	 	 	44.1	 	 				 	 	44.1	 	 				
Other comprehensive income (loss):	 				 				 				 				
Unrealized losses on investment securities, net of tax	 				 	 	(1.4	)	 	 	(1.4	)	 	 	(1.4	)	
Foreign currency translation adjustment, net of tax	 				 	 	11.1	 	 	 	11.1	 	 	 	11.1	 	
Minimum pension plan liability, net of tax	 				 	 	(5.1	)	 	 	(5.1	)	 	 	(5.1	)	
	 				 				 				 	 	 	 	
Comprehensive income (restated)	 				 				 				 	$	638.3	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2003 (restated)	 	 	1,874.0	 	 	 	(45.1	)	 	 	1,828.9	 	 				
Net income (restated)	 	 	751.6	 	 				 	 	751.6	 	 	$	751.6	 	
Dividends (restated)	 	 	(659.8	)	 				 	 	(659.8	)	 				
Capital contributed by parent in connection with acquisitions	 	 	28.7	 	 				 	 	28.7	 	 				
Other comprehensive income (loss):	 				 				 				 				
Unrealized losses on investment securities, net of tax	 				 	 	(3.0	)	 	 	(3.0	)	 	 	(3.0	)	
Foreign currency translation adjustment, net of tax	 				 	 	1.7	 	 	 	1.7	 	 	 	1.7	 	
Minimum pension plan liability, net of tax	 				 	 	(13.6	)	 	 	(13.6	)	 	 	(13.6	)	
	 				 				 				 	 	 	 	
Comprehensive income (restated)	 				 				 				 	$	736.7	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2004 (restated)	 	 	1,994.5	 	 	 	(60.0	)	 	 	1,934.5	 	 				
Net income (restated)	 	 	927.4	 	 				 	 	927.4	 	 	 	927.4	 	
Dividends	 	 	(417.2	)	 				 	 	(417.2	)	 				
Capital contributed by parent in connection with acquisitions	 	 	369.2	 	 				 	 	369.2	 	 				
Other comprehensive income (loss):	 				 				 				 				
Unrealized losses on investment securities, net of tax	 				 	 	(2.2	)	 	 	(2.2	)	 	 	(2.2	)	
Foreign currency translation adjustment, net of tax	 				 	 	(4.8	)	 	 	(4.8	)	 	 	(4.8	)	
Minimum pension plan liability, net of tax	 				 	 	4.9	 	 	 	4.9	 	 	 	4.9	 	
	 				 				 				 	 	 	 	
Comprehensive income (restated)	 				 				 				 	$	925.3	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2005 (restated)	 	 	2,873.9	 	 	 	(62.1	)	 	 	2,811.8	 	 				
Net income (unaudited)	 	 	438.7	 	 				 	 	438.7	 	 	 	438.7	 	
Other comprehensive income (loss) (unaudited):	 				 				 				 				
Unrealized losses on investment securities, net of tax	 				 	 	(0.8	)	 	 	(0.8	)	 	 	(0.8	)	
Foreign currency translation adjustment, net of tax	 				 	 	3.8	 	 	 	3.8	 	 	 	3.8	 	
	 				 				 				 	 	 	 	
Comprehensive income (unaudited)	 				 				 				 	$	441.7	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2006 (unaudited)	 	$	3,312.6	 	 	$	(59.1	)	 	$	3,253.5	 	 				

 

See accompanying notes.
 
F-6

Table of Contents
 THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
1. Distribution, Description of Business and Basis of Presentation
 
Distribution and Description of the Business
 
On January 26, 2006, First Data Corporation (“First Data”) announced that its board of directors had authorized in principle the separation of its money transfer and consumer payments businesses into an independent publicly traded company, The Western Union Company, through a spin-off of 100% of the common stock of The Western Union Company to the holders of record of First Data’s common stock (the “Distribution”). The Distribution will be pursuant to a separation and distribution agreement by which First Data will contribute to The Western Union Company the subsidiaries that operate its money transfer and consumer payments businesses and its interest in a Western Union money transfer agent, as well as related assets, including intellectual property and real estate (together with the subsidiaries and other assets to be contributed by First Data, “Western Union” or the “Company”). The spin-off is intended to be tax free to the stockholders and to First Data and Western Union. First Data will distribute all of the shares of Western Union common stock as a dividend on First Data common stock as of the record date for the Distribution. First Data and Western Union will each be independent and have separate public ownership, boards of directors and management. The Distribution is subject to final approval by First Data’s board of directors, which approval is subject to, among other things, receipt of a private letter ruling from the Internal Revenue Service and an opinion of Sidley Austin LLP, counsel to First Data (or other nationally recognized tax counsel), in each case with respect to the tax-free nature of the spin-off. Completion is expected in the late third or early fourth quarter of 2006. The Western Union Company was incorporated in Delaware as a wholly owned subsidiary of First Data on February 17, 2006; 1,000 shares of the common stock of Western Union, par value $0.01 per share, were authorized and 100 shares are issued and outstanding. The Company will increase the number of shares of its common stock to facilitate the Distribution.
 
The Western Union business consists of the following services:
 
 	•	 	Consumer-to-consumer provides money transfer services between consumers, primarily through a global network of third-party agents using its multi-currency, real-time money transfer processing systems. This service is available for both intra-country transfers—that is, money transfers from one location to another in the same country—and internationally—that is, the transfer of funds into or out of the country.	
 
 	•	 	Consumer-to-business focuses on payments from consumers to businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies, through Western Union networks of third-party agents and various electronic channels. This service is generally available only inside a particular country, although in some instances Western Union provides the ability for senders to make payments from one country to another.	
 
 	•	 	Other includes the Company’s money order business and prepaid services. The Company sells Western Union branded money orders issued by Integrated Payment Systems Inc. (“IPS”), a subsidiary of First Data, to consumers at non-bank retail locations. Western Union’s prepaid service business markets a Western Union branded prepaid debit card, and a Western Union branded phone card, and provides top-up services for third parties that allow consumers to pay in advance for mobile phone and other services.	
 
The primary entities providing the services described above to be distributed in connection with the spin-off are Western Union Financial Services, Inc. (“WUFSI”), Vigo Remittance Corp. (“Vigo”), Orlandi Valuta, E Commerce Group and Paymap Inc., as well as the Convenience Pay and money order services. There are
 
F-7

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
additional legal entities included with the Distribution that do not have significant operating activity including First Financial Management Corporation (“FFMC”), WUFSI’s parent company.
 
Various aspects of the Company’s services and businesses are subject to U.S. federal, state and local regulation, as well as regulation by foreign jurisdictions, including banking regulations in certain foreign countries.
 
As of June 30, 2006, Western Union has two four-year labor contracts (both expiring August 6, 2008) with the Communications Workers of America, AFL-CIO representing approximately 20% of the Company’s workforce.
 
Basis of Presentation
 
The accompanying combined financial statements were prepared in connection with the Distribution. The accompanying combined financial statements reflect the combined historical results of operations, financial position and cash flows of the First Data subsidiaries that operate its money transfer and consumer payments businesses and a Western Union money transfer agent in which First Data holds an interest, as described above under the caption “Distribution and Description of the Business,” as if such businesses had been combined for all periods presented. All significant intercompany transactions and accounts have been eliminated. The assets and liabilities have been reflected in these combined financial statements on a historical basis, as prior to the Distribution all of the assets and liabilities presented are 100% owned by First Data and are being transferred within the First Data consolidated group. Management believes the assumptions underlying the combined financial statements, including the assumptions around allocating general corporate overhead costs from First Data (Note 3), are reasonable. However, these combined financial statements do not include all of the actual expenses that would have been incurred had Western Union been a stand-alone entity during the periods presented and do not reflect Western Union’s combined results of operations, financial position and cash flows had Western Union been a stand-alone company during the periods presented.
 
Due to the limited number of shares outstanding of Western Union prior to the Distribution, earnings per share has not been presented in these combined financial statements.
 
The accompanying Combined Balance Sheets are unclassified due to the short-term nature of Western Union’s settlement obligations, contrasted with its ability to invest cash awaiting settlement in long-term investment securities.
 
Unaudited Interim Financial Information
 
The accompanying unaudited combined financial statements as of June 30, 2006 and for the six months ended June 30, 2006 and 2005 have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited combined financial statements as of June 30, 2006 and for the six month periods ended June 30, 2006 and 2005 have been prepared on the same basis as the combined financial statements as of December 31, 2005 and 2004 and for each of the three years in the period ended December 31, 2005 included herein, and in the opinion of management, reflect all adjustments, consisting only of normal and recurring accruals, considered necessary to present fairly the Company’s combined financial position as of June 30, 2006 and the combined results of its operations and its cash flows for the six month periods ended June 30, 2006 and 2005. The combined results of operations for the six months ended June 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006 or for any other period.
 
F-8

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Unaudited Pro Forma Information
 
The unaudited Pro Forma Combined Balance Sheet as of June 30, 2006 displays the pro forma effect of the Distribution as if it had occurred on June 30, 2006. Such unaudited Pro Forma Combined Balance Sheet gives effect to the assumed issuance by Western Union of $3.6 billion in combined indebtedness, the satisfaction of the amounts contributed/owed between First Data and Western Union, the issuance by Western Union to First Data shares of Western Union common stock, the distribution of such shares to the holders of First Data common stock, and the transfer between First Data and Western Union of certain assets and liabilities related to the Company’s and First Data’s businesses.
 
Financial Statement Restatement
 
The Company had intended to use certain foreign currency forward contracts to mitigate risk with respect to changes in foreign exchange rates and had treated these derivatives as cash flow hedges under Statement of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138 and SFAS No. 149 (“SFAS No. 133”). There are specific documentation requirements that must be met for derivatives to qualify as cash flow hedges pursuant to SFAS No. 133, which the Company previously believed were being met. However, the Company recently determined based on an evaluation of the documentation requirements of SFAS No. 133 that it did not have adequate documentation at the inception of its derivative agreements to qualify for hedge accounting. Accordingly, the accompanying Combined Financial Statements have been restated for all periods, except for the six month period ended June 30, 2006. The primary effect of this change is the inclusion in net income of any changes in the fair market value of the related derivative instruments. Changes in the fair market value of such derivatives were previously recognized in accumulated other comprehensive income (loss).
 
In addition, the Company has restated its Combined Financial Statements to reflect translation gains and losses in the Combined Statements of Income related to certain notes receivable from affiliates repayable in euros and certain related foreign currency swap agreements with First Data. The functional currency of the Company’s entities that have extended these borrowings is the United States dollar and the Company does not consolidate, combine or have an equity ownership interest in the applicable affiliates of First Data to which the related notes receivable have been extended. The foreign currency swap agreements that were entered into between the Company and First Data had not been previously recognized in the financial statements and were identified as the Company prepares for its separation from First Data. The Company has now reflected these foreign currency swap agreements by recording the changes in the fair market value of these instruments through the applicable period’s Combined Statements of Income from the point in time these agreements were initiated.
 
F-9

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
A summary of the changes resulting from the restatement is as follows:

 	  	Year Ended December 31,	 	
(in millions)	  	  2005  	 	 	2004	 	 	2003	 	
Combined Statement s of Income:	  			 			 			
Revenues	  	0.5	 	 	23.2	 	 	30.8	 	
Operating income	  	0.5	 	 	23.2	 	 	30.8	 	
Derivative gains/(losses), net	  	45.8	 	 	(30.2	)	 	(37.9	)	
Foreign exchange effect on notes receivable from affiliates, net	  	(5.9	)	 	7.5	 	 	—  	 	
Provision for income taxes	  	11.2	 	 	1.0	 	 	(2.1	)	
Net income	  	29.2	 	 	(0.5	)	 	(5.0	)	
				
Combined Statement s of Cash Flows:	  			 			 			
Net cash provided by operating activities	  	0.5	 	 	23.2	 	 	30.8	 	
Net cash used in investing activities	  	(0.5	)	 	(23.2	)	 	(30.8	)	
			
 	  	December 31,	 	 	 	 	
 	  	  2005  	 	 	  2004  	 	 	 	 	
Combined Balance Sheets:	  			 			 			
Receivables from affiliated companies, net	  	7.1	 	 	—  	 	 			
Notes receivable from affiliated companies	  	10.2	 	 	23.2	 	 			
Total assets	  	17.3	 	 	23.2	 	 			
Deferred tax liability, net	  	3.2	 	 	(2.5	)	 			
Total liabilities	  	3.2	 	 	(2.5	)	 			
Net investment in The Western Union Company	  	29.4	 	 	0.2	 	 			
Accumulated other comprehensive loss	  	(15.3	)	 	25.5	 	 			
Total net investment in The Western Union Company	  	14.1	 	 	25.7	 	 			
Total liabilities and net investment in The Western Union Company	  	17.3	 	 	23.2	 	 			
 
2. Summary of Significant Accounting Policies
 
Use of Estimates
 
The preparation of combined financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Actual results could differ from those estimates.
 
Principles of Consolidation
 
Western Union utilizes the equity method of accounting when it has an ownership interest of between 20% and 50% in an entity, provided it is able to exercise significant influence over the entity’s operations.
 
Western Union consolidates financial statements when it will absorb a majority of an entity’s expected losses or residual returns or when it has the ability to exert control over the entity. Control is normally established when ownership interests exceed 50% in an entity. However, when Western Union does not have the ability to exercise control over a majority-owned entity as a result of other investors having contractual rights over the management and operations of the entity, it accounts for the entity under the equity method. As of December 31, 2005 and 2004, there were no greater-than-50%-owned affiliates whose financial statements were not consolidated.
 
F-10

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Fair Value of Financial Instruments
 
Carrying amounts for Western Union financial instruments, including cash and cash equivalents, settlement assets (other than investment securities) and settlement obligations, approximate fair value due to their short maturities. Investment securities, included in settlement assets, are carried at fair market value and are considered available for sale (Note 6).
 
Cash and Cash Equivalents
 
Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates market value.
 
Western Union maintains cash and cash equivalent balances with various financial institutions. Western Union limits the concentration of its cash and cash equivalents with any one institution; however, such balances may at times exceed federal insurance limits. Western Union periodically evaluates the credit worthiness of these institutions to minimize risk.
 
Allowance for Doubtful Accounts
 
Western Union records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, and other matters the Company identifies in its routine collection monitoring. The allowance for doubtful accounts was $8.4 million and $13.3 million at December 31, 2005 and 2004, respectively.
 
Settlement Assets and Obligations
 
Settlement assets represent funds received or to be received from agents for unsettled money transfers and consumer payments. Western Union records corresponding settlement obligations relating to amounts payable under money transfer and payment service arrangements.
 
Settlement assets are comprised of cash and cash equivalents, receivables from selling agents and investment securities. Cash received by Western Union agents generally becomes available to Western Union within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to Western Union. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. In addition, Western Union performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. See Note 6 for information concerning the Company’s investment securities.
 
Settlement obligations consist of money transfer and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Payment service payables represent amounts to be paid to utility companies, collection agencies, finance companies, mortgage servicers, government entities and others. Most agents typically settle with transferees first and then obtain reimbursement from Western Union. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees.
 
F-11

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Property and Equipment
 
Property and equipment are stated at cost, less accumulated depreciation, which is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to 10 years) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred.
 
Deferred Customer Set Up Costs
 
The Company capitalizes direct incremental costs associated with the enrollment of customers in the Equity Accelerator program, a service that allows consumers to complete ACH transactions to make recurring mortgage payments. Deferred customer set up costs, included in “Other assets” in the Combined Balance Sheets, are amortized to “Cost of services” in the Combined Statements of Income over the length of the customer’s expected participation in the program (generally five to seven years). Actual customer attrition data is assessed at least annually and the amortization period is adjusted prospectively.
 
Goodwill
 
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations. The Company’s annual goodwill impairment test did not identify any goodwill impairment in 2004 or 2003; however, Western Union recorded a goodwill impairment charge of $8.7 million in 2005 due to a change in strategic direction relating to one of its majority owned prepaid businesses (Note 4). The majority of goodwill on Western Union’s Combined Balance Sheets arose in connection with FFMC’s acquisition of WUFSI in November 1994. FFMC is WUFSI’s direct parent company and was acquired by First Data in October 1995.
 
Other Intangible Assets
 
Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts) and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in “Cost of services” in the Combined Statements of Income is amortization expense of approximately $47.5 million, $45.2 million and $42.6 million for the years ended December 31, 2005, 2004 and 2003, respectively.
 
The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations, contractual minimums and/or penalties in the case of early termination. The Company’s accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated ongoing future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract.
 
The Company develops software that is used in providing services. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed all planning, designing, coding and testing activities that are necessary to determine that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are amortized over a term of three to five years.
 
F-12

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The following table provides the components of other intangible assets (in millions):

  	  	December 31, 2005	  	December 31, 2004	
 	  	Weighted-
Average
Amortization
Period
(in years)	  	Initial
Cost	  	Net of
Accumulated
Amortization	  	Initial
Cost	  	Net of
Accumulated
Amortization	
Capitalized contract costs	  	5.3	  	$	118.2	  	$	56.7	  	$	105.5	  	$	56.1	
Acquired contracts	  	8.8	  	 	55.0	  	 	42.0	  	 	21.7	  	 	12.1	
Acquired trademarks	  	25.0	  	 	28.6	  	 	28.0	  	 	—  	  	 	—  	
Developed software	  	4.2	  	 	57.2	  	 	16.0	  	 	57.2	  	 	25.0	
Purchased or acquired software	  	3.4	  	 	38.4	  	 	15.9	  	 	28.0	  	 	12.4	
Other intangibles	  	8.9	  	 	38.3	  	 	21.8	  	 	27.0	  	 	14.3	
	  		  	 	 	  	 	 	  	 	 	  	 	 	
Total other intangibles	  	7.8	  	$	335.7	  	$	180.4	  	$	239.4	  	$	119.9	

The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2005 is expected to be $50.4 million in 2006, $36.5 million in 2007, $19.3 million in 2008, $12.5 million in 2009, $8.9 million in 2010 and $52.8 million thereafter.
 
Other intangible assets are reviewed for impairment on an annual basis and whenever events indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. Western Union did not record any impairment related to other intangible assets during the years ended December 31, 2005, 2004 and 2003.
 
Revenue Recognition
 
The majority of the Company’s revenues are comprised of consumer money transfer transaction fees that are based on the principal amount of the money transfer and the locations from and to which funds are transferred. Consumer money transfer transaction fees are set by the Company and recorded as revenue at the time of sale. In certain consumer money transfer transactions involving different send and receive currencies, the Company generates revenue based on the difference between the exchange rate set by Western Union to the consumer and the rate at which Western Union or its agents are able to acquire currency. This foreign exchange revenue is recorded at the time the related transaction fee revenue is recognized.
 
The Company also offers several consumer-to-business payment services, including payments from consumers to utility companies, collection agencies, finance companies, mortgage servicers, government entities and others. Revenues for these services are primarily derived from transaction fees, which are recorded as revenue when payments are sent to the intended recipients.
 
The Company’s Equity Accelerator service requires a consumer to pay an upfront enrollment fee to participate in this mortgage payment service. These enrollment fees are deferred and recognized into income over the length of the customer’s expected participation in the program. Actual customer attrition data is assessed at least annually and the period over which revenue is recognized is adjusted prospectively. Many factors impact the duration of the expected customer relationship, including interest rates, refinance activity and trends in consumer behavior.
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The Company sells money orders issued by IPS under the Western Union brand and manages the agent network through which such money orders are sold. Western Union recognizes monthly commissions from IPS based on an investment yield on the average investable balance resulting from the sale of money orders. Western Union also recognizes transaction fees received, collected by IPS and remitted to Western Union at the time a money order is issued to the consumer.
 
Loyalty Program
 
Western Union operates a loyalty program which consists of points that are awarded to program participants. Such points may be redeemed for either a discount on future money transfers or merchandise. The Company estimates the distribution between awards of merchandise and discounts based on recent redemption history and trends, measured on a quarterly basis. Revenue is deferred for the portion of points expected to be ultimately redeemed for discounts in a manner that reflects the consumer’s progress toward earning such discounts. Costs associated with the redemption of merchandise are reflected in “Selling, general and administrative” expenses in the Combined Statements of Income.
 
Cost of Services
 
Cost of services consists of costs directly associated with providing services to consumers, including commissions paid to agents, which are generally recognized at the time of sale. Some agents outside the U.S. also receive additional commissions based on a portion of the foreign exchange revenue associated with money transfer transactions. Other costs included in costs of services include personnel, software, equipment, telecommunications, bank fees, depreciation and amortization, and other operating expenses incurred in connection with providing money transfers and other payment services.
 
Advertising Costs
 
Advertising costs, which are included in “Selling, general and administrative” expenses in the Combined Statements of Income, are expensed as incurred or at the time the advertising first takes place. Advertising costs for the years ended December 31, 2005, 2004 and 2003 were $243.3 million, $227.9 million and $183.5 million, respectively.
 
Income Taxes
 
Western Union’s taxable income has historically been included in the consolidated U.S. federal income tax return of First Data and also in a number of state income tax returns, which are filed as consolidated returns. Western Union files its own separate tax returns in foreign jurisdictions. Western Union’s provision for income taxes has been computed as if it were a separate tax-paying entity. Federal and state income taxes payable are remitted to First Data. The state and other income tax provisions represent applicable taxes payable to the various jurisdictions in which Western Union operates. Foreign taxes are paid in each respective jurisdiction locally.
 
Western Union accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the combined financial statements.
 
Deferred tax assets and liabilities are recognized based on temporary differences between the combined financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Foreign Currency Translation
 
The U.S. dollar is the functional currency for all of Western Union’s businesses except certain investments located primarily in the United Kingdom, Ireland and Argentina. Foreign currency denominated assets and liabilities for those entities for which the local currency is the functional currency are translated into U.S. dollars based on exchange rates prevailing at the end of the period. Revenues and expenses are translated at average exchange rates prevailing during the period. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the U.S. dollar are included as a component of accumulated other comprehensive income or loss. Foreign currency translation gains and losses on assets and liabilities of foreign operations in which the U.S. dollar is the functional currency are recognized in operations.
 
Derivative Financial Instruments
 
Western Union utilizes derivative instruments to mitigate foreign currency risk. Western Union recognizes all derivative financial instruments as assets or liabilities at fair value and has reported such amounts with nonaffiliated parties in the “Other assets” or “Other liabilities” captions in the accompanying Combined Balance Sheets. These derivatives do not meet the requirements of SFAS No. 133 to be accounted for as hedges. Accordingly, the change in fair value of these derivatives is included in net income in the accompanying Combined Statements of Income.
 
Certain of the Company’s derivatives are short-term, generally less than two weeks, and others have longer terms, generally one year. The change in the fair value of the derivatives with longer maturities are recorded in the caption “Derivative (losses)/gains, net” in the accompanying Combined Statements of Income. Derivatives with shorter maturities are reported in operating expenses in the accompanying Combined Statements of Income as such derivatives are used to mitigate the risk of foreign exchange rate fluctuations on settlement assets and settlement obligations. Foreign exchange rate fluctuations on settlement assets and settlement obligations are also recorded in operating expenses.
 
The Company also has certain other foreign currency swap arrangements with First Data to mitigate the foreign exchange impact on certain euro denominated notes receivable with affiliates. These foreign currency swaps do not qualify for hedge accounting and, accordingly, the fair value changes of these agreements are reported in the accompanying Combined Statements of Income as “Foreign exchange effect on notes receivable from affiliates, net.” The fair market value of these swaps is recorded in “Receivables from affiliated companies, net” in the accompanying Combined Balance Sheets and they will be settled in cash along with the related notes receivable in connection with the spin-off.
 
The estimated fair value of Western Union’s derivative financial instruments is based on market and dealer quotations. Accordingly, these estimated values may not be representative of actual values that could have been realized as of December 31, 2005 or 2004 or that will be realized in the future.
 
Stock-Based Compensation
 
Western Union participates in First Data’s stock-based compensation plans that provide for the granting of First Data stock options, restricted stock awards and employee stock purchase plan rights to employees and other key individuals who perform services for the Company.
 
F-15

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Effective January 1, 2006, the Company adopted SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), using the modified prospective method. SFAS 123R requires all stock-based compensation to employees be measured at fair value and expensed over the requisite service period and also requires an estimate of forfeitures when calculating compensation expense. The Company recognizes compensation cost on awards with graded vesting on a straight-line basis over the requisite service period for the entire award. In accordance with the Company’s chosen method of adoption, results for prior periods have not been adjusted. Prior to the adoption of SFAS 123R, the Company followed Accounting Principles Board (“APB”) Opinion No. 25 which accounts for stock-based payments to employees using the intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. Refer to Note 15 for additional discussion regarding details of the Company’s stock-based compensation plans and the adoption of SFAS 123R.
 
New Accounting Pronouncement
 
The Financial Accounting Standards Board (“FASB”) has issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN 48”), regarding accounting for, and disclosure of, uncertain tax positions. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact FIN 48 will have on its combined results of operations and financial position.
 
3. Related Party Transactions
 
Related Party Transactions with First Data
 
The Combined Statements of Income include expense allocations for certain corporate functions historically provided to Western Union by First Data. If possible, these allocations were made on a specific identification basis. Otherwise, the expenses related to services provided to Western Union by First Data were allocated to Western Union based on relative percentages, as compared to First Data’s other businesses, of headcount or other appropriate methods depending on the nature of each item of cost to be allocated.
 
Charges for functions historically provided to Western Union by First Data are primarily attributable to First Data’s performance of many shared services that the Company benefits from such as treasury, tax, accounting and reporting, mergers and acquisitions, risk management, legal, internal audit, procurement, human resources, investor relations and information technology. The Company also participates in certain First Data insurance, benefit and incentive plans, and it receives services directly related to the operations of its businesses such as call center services, credit card processing, printing and mailing. The Combined Statements of Income reflect charges from First Data and its affiliates for these services of $97.1 million and $87.2 million for the six months ended June 30, 2006 and 2005, respectively, and $166.3 million, $158.3 million and $142.2 million for the years ended December 31, 2005, 2004 and 2003, respectively. Certain of these services will continue to be provided subsequent to the Distribution for varying periods. Included in the charges above are amounts recognized for stock-based compensation expense (Note 15), as well as net periodic benefit income associated with the Company’s pension plans (Note 10).
 
As of December 31, 2005 and 2004, the Company has notes payable to First Data subsidiaries of approximately $163.5 million and $9.9 million, respectively. Included in “Receivables from affiliated companies, net” in the Combined Balance Sheets, the Company has accrued interest payable on these notes of $4.1 and $1.0
 
F-16

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
million as of December 31, 2005 and 2004, respectively. Included in “Interest income from affiliates, net” in the Combined Statements of Income for the years ended December 31, 2005 and 2004 was interest expense of $4.5 million and $6.4 million, respectively. No interest expense was incurred for the year ended December 31, 2003. These notes bear interest at rates ranging from 3.89% to 8.375% annually.
 
As of December 31, 2005 and 2004, the Company has notes receivable from First Data subsidiaries of approximately $751.5 million and $278.2 million, respectively. These notes were made to finance certain international acquisitions made by these First Data subsidiaries. Included in “Receivables from affiliated companies, net” in the Combined Balance Sheets, the Company has accrued interest receivable on these notes of $7.8 million and $8.3 million as of December 31, 2005 and 2004, respectively. Included in “Interest income from affiliates, net” in the Combined Statements of Income for the years ended December 31, 2005 and 2004 was interest income of $28.8 million and $15.5 million, respectively. There was no interest income on notes receivable from affiliates during 2003. These notes bear interest at rates ranging from 3.45% to 7.0% annually. Certain of these notes receivable also have related foreign currency swap arrangements to mitigate the foreign exchange impact to the Company on certain euro denominated notes receivable with affiliates. The fair market value of these swaps is recorded in “Receivables from affiliated companies, net” in the Combined Balance Sheets and will be settled in cash along with the related notes receivable in connection with the spin-off (Note 14).
 
During the years ended December 31, 2005, 2004 and 2003, Western Union received transaction fee and commission revenue from IPS in connection with the sale and distribution of money orders through its agent network of approximately $63.9 million, $60.5 million and $61.4 million, respectively.
 
Other Related Party Transactions
 
The Company has ownership interests in certain of its agents, all of which are accounted for under the equity method of accounting. The Company pays these agents, as it does its other agents, commissions for money transfer and other services provided on the Company’s behalf. Commissions paid to these agents, from the date of investment, for the six months ended June 30, 2006 and 2005 totaled $99.4 million and $84.0 million, respectively, and for the years ended December 31, 2005, 2004 and 2003 totaled $177.7 million, $105.1 million and $69.0 million, respectively.
 
Richard Kiphart, a director of First Data, is the manager of the corporate finance department and a principal at William Blair & Company, L.L.C. (“William Blair”). Prior to First Data’s acquisition of GMT Group, Inc. (“GMT”), the parent company of Vigo, in October 2005 (Note 4), GMT hired William Blair to advise it in connection with its consideration of the proposed acquisition and to provide a fairness opinion in connection with the acquisition. GMT paid William Blair a fee of $2.8 million upon completion of the acquisition and reimbursed William Blair for all of its out of pocket expenses reasonably incurred by it in connection with its services (including fees and expenses of its counsel). GMT has also agreed to indemnify William Blair against potential liabilities arising out of its engagement.
 
4. Acquisitions
 
In October 2005, First Data acquired 100% of GMT, the owner of Vigo, a provider of consumer-to-consumer money transfer services to various countries with nearly 18,000 agent locations, for approximately $369.2 million, including cash acquired of $20.1 million. GMT is being contributed to Western Union in connection with the Distribution and the purchase price is reflected as a capital contribution in the Combined Statements of Net Investment in The Western Union Company. The results of Vigo’s operations have
 
F-17

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
been included in the combined financial statements since the acquisition date. The purchase price allocation resulted in $78.4 million of identifiable intangible assets, which are being amortized over 3.5 to 11 years, except for acquired trademarks aggregating $28.6 million, which are being amortized over 25 years. Goodwill of $283.7 million was recorded in connection with the acquisition of GMT, none of which is expected to be deductible for tax purposes. The purchase price allocation is preliminary and subject to the finalization of certain liabilities.
 
In 2004, the Company purchased 30% equity interests in two of its international money transfer agents. The aggregate consideration paid during 2004 for these agents was $42.0 million, net of $5.4 million of holdback reserves to cover claims arising from the acquisitions, which was paid in 2005 upon successful resolution of the related claims. The aggregate purchase price allocation for these acquisitions resulted in $12.9 million of identifiable intangible assets, which are being amortized over three to seven years. Western Union’s investments in these agents are accounted for under the equity method of accounting.
 
In August 2003, the Company acquired a 51% ownership interest in Eposs Limited (“Eposs”), a United Kingdom-based seller of cellular prepaid products in Europe, for approximately $12.2 million, including cash acquired of $9.2 million. The purchase price allocation resulted in identifiable intangible assets of $7.2 million, which were being amortized over three to nine years, and goodwill of $28.0 million. In the fourth quarter of 2005, Western Union recorded a goodwill impairment charge of $8.7 million due to a change in strategic direction. The Company’s majority interest in Eposs was sold on April 28, 2006 and the fair value of net assets on disposition approximated the net book value subsequent to the recognition of the impairment charge noted above.
 
The pro forma impact of all acquisitions on net income in 2005, 2004 and 2003 was immaterial.
 
The following table presents changes to goodwill for the years ended December 31, 2005 and 2004 (in millions):

  	  	Consumer-to-
Consumer	  	Consumer-to-
Business	  	Other	 	 	Total	 	
January 1, 2004 balance	  	$	1,107.6	  	$	159.5	  	$	29.2	 	 	$	1,296.3	 	
Purchase price adjustments and contingent consideration paid	  	 	—  	  	 	35.6	  	 	11.7	 	 	 	47.3	 	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
December 31, 2004 balance	  	 	1,107.6	  	 	195.1	  	 	40.9	 	 	 	1,343.6	 	
Acquisitions	  	 	283.1	  	 	—  	  	 	—  	 	 	 	283.1	 	
Impairments	  	 	—  	  	 	—  	  	 	(8.7	)	 	 	(8.7	)	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
December 31, 2005 balance	  	$	1,390.7	  	$	195.1	  	$	32.2	 	 	$	1,618.0	 	

The terms of certain of the Company’s acquisition agreements provide for additional consideration to be paid if the acquired entity’s results of operations exceed certain targeted levels. Such additional consideration is paid in cash and is recorded as additional purchase price when targeted levels are achieved. Additional consideration paid in 2004 and 2003 totaled $28.7 million and $40.7 million, respectively. There was no additional consideration paid in 2005, and there are no potential additional consideration payments remaining as of December 31, 2005.
 
5. Settlement Assets and Settlement Obligations
 
Settlement assets represent funds received or to be received from agents for unsettled money transfers and consumer payments. Western Union records corresponding settlement obligations relating to amounts payable
 
F-18

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
under money transfer and payment service arrangements. The difference in the aggregate amount of settlement assets and obligations is primarily due to unrealized net investment gains and losses, which are reported as a component of other comprehensive income or loss.
 
Settlement assets and obligations are comprised of the following (in millions):

  	  	December 31,	
 	  	2005	  	2004	
Settlement Assets:	  			  			
Cash and cash equivalents	  	$	183.9	  	$	215.1	
Receivables from selling agents, net	  	 	593.4	  	 	331.6	
Investment securities	  	 	151.8	  	 	170.2	
	  	 	 	  	 	 	
	  	$	929.1	  	$	716.9	

							
Settlement Obligations:	  			  			
Money transfer and payment services payables	  	$	535.9	  	$	430.7	
Payables to agents	  	 	390.8	  	 	280.3	
	  	 	 	  	 	 	
	  	$	926.7	  	$	711.0	

6. Investment Securities
 
Investment securities consist primarily of high-quality state and municipal debt instruments. All of the Company’s investment securities were marketable securities during all periods presented. The Company is required to maintain specific grades of investments and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state regulations. Western Union does not hold financial instruments for trading purposes, and all investment securities are classified as available-for-sale and recorded at fair value, which is based primarily on market quotations. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by making high quality investments. At December 31, 2005, all investment securities had credit ratings of “AA” or better from a major credit rating agency.
 
Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive income or loss, net of related deferred income taxes. There were no significant realized gains transferred out of other comprehensive income during the periods presented.
 
Realized gains and losses on investments are calculated using the specific-identification method and are recognized during the period the investment is sold or when an investment experiences an other than temporary decline in value below cost or amortized cost. When an investment is deemed to have an other than temporary decline in value it is reduced to its fair value, which becomes the new cost basis of the investment. Western Union considers both qualitative and quantitative indicators, including, but not limited to, the length of time the investment has been in an unrealized loss position, when judging whether a decline in value is other than temporary in nature.
 
F-19

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The components of investment securities, all of which are classified as available-for-sale, are as follows (in millions):

December 31, 2005	  	Amortized
Cost	  	Fair
Value	  	Gross
Unrealized
Gains	  	Gross
Unrealized
Losses	 	 	Net
Unrealized
Gains
(Losses)	
State and municipal obligations	  	$	142.4	  	$	144.9	  	$	2.6	  	$	(0.1	)	 	$	2.5	
Preferred stock	  	 	6.9	  	 	6.9	  	 	—  	  	 	—  	 	 	 	—  	
	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	 	
	  	$	149.3	  	$	151.8	  	$	2.6	  	$	(0.1	)	 	$	2.5	

																		
December 31, 2004	  	Amortized
Cost	  	Fair
Value	  	Gross
Unrealized
Gains	  	Gross
Unrealized
Losses	 	 	Net
Unrealized
Gains
(Losses)	 	
State and municipal obligations	  	$	156.3	  	$	162.9	  	$	6.9	  	$	(0.3	)	 	$	6.6	 	
Preferred stock	  	 	8.0	  	 	7.3	  	 	—  	  	 	(0.7	)	 	 	(0.7	)	
	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
	  	$	164.3	  	$	170.2	  	$	6.9	  	$	(1.0	)	 	$	5.9	 	

No individual investment balance included within investment securities represents greater than 10% of total investment securities as of December 31, 2005 and 2004.
 
The following summarizes contractual maturities of state and municipal obligations as of December 31, 2005 (in millions):

  	  	Amortized
Cost	  	Fair
Value	
Due within 1 year	  	$	24.7	  	$	25.0	
Due after 1 year through 5 years	  	 	104.8	  	 	107.0	
Due after 5 years	  	 	12.9	  	 	12.9	
	  	 	 	  	 	 	
	  	$	142.4	  	$	144.9	

Preferred stock is not included above because the securities do not have fixed maturities. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations.
 
The following tables present the gross unrealized losses and fair value of Western Union’s investment securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2005 and 2004 (in millions):

  	  	Less than 12 months	 	 	Greater than 12 months	  	Total
Fair Value	  	Total
Unrealized
Losses	 	
December 31, 2005	  	Fair Value	  	Unrealized
Losses	 	 	Fair Value	  	Unrealized
Losses	  		  			
State and municipal obligations	  	$	18.5	  	$	(0.1	)	 	$	—  	  	$	—  	  	$	18.5	  	$	(0.1	)	
	  	 	 	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	 	
	  	$	18.5	  	$	(0.1	)	 	$	—  	  	$	—  	  	$	18.5	  	$	(0.1	)	

F-20

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003

 	  	Less than 12 months	 	 	Greater than 12 months	 	 	Total
Fair Value	  	Total
Unrealized
Losses	 	
December 31, 2004	  	Fair Value	  	Unrealized
Losses	 	 	Fair Value	  	Unrealized
Losses	 	 		  			
State and municipal obligations	  	$	—  	  	$	—  	 	 	$	3.3	  	$	(0.3	)	 	$	3.3	  	$	(0.3	)	
Preferred stock	  	 	3.3	  	 	(0.3	)	 	 	3.9	  	 	(0.4	)	 	 	7.2	  	 	(0.7	)	
	  	 	 	  	 	 	 	 	 	 	  	 	 	 	 	 	 	  	 	 	 	
	  	$	3.3	  	$	(0.3	)	 	$	7.2	  	$	(0.7	)	 	$	10.5	  	$	(1.0	)	

The Company’s unrealized losses related to the following:
 
State and municipal obligations—The unrealized losses as of December 31, 2005 and 2004 on the Company’s investments in state and municipal obligations were the result of increases in interest rates and were not related to credit quality. These unrealized losses were deemed to be not other-than-temporary because the Company has the ability and intent to hold these investments until a recovery of fair value occurs, which may be upon maturity.
 
Preferred stock—The majority of the Company’s investments in preferred stock are in government sponsored mortgage entities. The unrealized losses on preferred stock as of December 31, 2004 resulted primarily from the illiquidity of such investments and a decline in interest rates and were not related to credit quality. Analyses of the unrealized losses on preferred stock performed during 2005 and 2004 indicated other-than-temporary impairments on a portion of the Company’s investments, resulting in impairment charges of $1.1 million and $1.0 million for 2005 and 2004, respectively.
 
7. Property and Equipment
 
Property and equipment consists of the following (in millions):

  	  	December 31,	 	
 	  	2005	 	 	2004	 	
Equipment	  	$	222.0	 	 	$	197.6	 	
Leasehold improvements	  	 	27.1	 	 	 	25.1	 	
Furniture and fixtures	  	 	16.6	 	 	 	13.5	 	
Projects in process	  	 	0.3	 	 	 	0.3	 	
	  	 	 	 	 	 	 	 	
	  	 	266.0	 	 	 	236.5	 	
Less accumulated depreciation	  	 	(183.6	)	 	 	(165.8	)	
	  	 	 	 	 	 	 	 	
Property and equipment, net	  	$	82.4	 	 	$	70.7	 	

Amounts charged to expense for depreciation of property and equipment were $32.0 million, $34.0 million and $35.8 million during the years ended December 31, 2005, 2004 and 2003, respectively.
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
8. Other Assets and Liabilities
 
The following table summarizes the components of other assets and other liabilities (in millions):

  	  	December 31,	
 	  	2005	  	2004	
Other assets:	  			  			
Equity method investments	  	$	150.2	  	$	156.4	
Deferred customer set up costs	  	 	46.2	  	 	40.7	
Amounts advanced to agents	  	 	46.0	  	 	7.1	
Accounts receivable, net	  	 	24.8	  	 	22.3	
Prepaid expenses	  	 	9.0	  	 	6.4	
Derivative financial instruments	  	 	19.4	  	 	—  	
Other	  	 	46.4	  	 	55.7	
	  	 	 	  	 	 	
Total other assets	  	$	342.0	  	$	288.6	

							
Other liabilities:	  			  			
Deferred revenue	  	$	87.1	  	$	82.1	
Derivative financial instruments	  	 	1.1	  	 	31.1	
Due to minority interest holder	  	 	23.8	  	 	24.6	
Other liabilities	  	 	35.9	  	 	31.4	
	  	 	 	  	 	 	
Total other liabilities	  	$	147.9	  	$	169.2	

Amounts advanced to agents
 
From time to time the Company makes advances and loans to agents. These advances and loans generally are secured by settlement funds payable by the Company to these agents. In January 2006, the Company signed a six year agreement with one of its existing agents which included a four year loan of $140.0 million to the agent. The terms of the loan agreement require that a percentage of commissions earned by the agent (39% in 2006, 52% in 2007, 61% in 2008 and 64% in 2009) be withheld by the Company as repayment of the loan and the agent remains obligated to repay the loan if commissions earned are not sufficient. The loan receivable was recorded in “Other assets” in the Combined Balance Sheets as of June 30, 2006. The Company imputes interest on this below market rate note receivable and has recorded the note net of a discount of $45.9 million as of June 30, 2006.
 
9. Income Taxes
 
The components of pretax income are as follows (in millions):

  	  	Year ended December 31,	
 	  	2005	  	2004	  	2003	
Components of pretax income:	  			  			  			
Domestic	  	$	801.9	  	$	689.7	  	$	861.9	
Foreign	  	 	542.2	  	 	408.9	  	 	100.7	
	  	 	 	  	 	 	  	 	 	
	  	$	1,344.1	  	$	1,098.6	  	$	962.6	

F-22

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The provision for income taxes is as follows (in millions):

 	  	Year ended December 31,	
 	  	2005	  	2004	  	2003	
Federal	  	$	322.0	  	$	276.2	  	$	273.7	
State and local	  	 	45.1	  	 	35.7	  	 	31.3	
Foreign	  	 	49.6	  	 	35.1	  	 	23.9	
	  	 	 	  	 	 	  	 	 	
	  	$	416.7	  	$	347.0	  	$	328.9	

The Company’s effective tax rates differ from statutory rates as follows:

  	  	Year ended December 31,	 	
 	  	2005	 	 	2004	 	 	2003	 	
Federal statutory rate	  	35.0	%	 	35.0	%	 	35.0	%	
State income taxes, net of federal income tax benefits	  	2.0	%	 	2.0	%	 	2.1	%	
Foreign rate differential	  	(5.8	)%	 	(4.7	)%	 	(1.3	)%	
Federal tax credits	  	(0.4	)%	 	(0.5	)%	 	(0.5	)%	
Other	  	0.2	%	 	(0.2	)%	 	(1.1	)%	
	  	 	 	 	 	 	 	 	 	
Effective tax rate	  	31.0	%	 	31.6	%	 	34.2	%	

Western Union’s income tax provision consists of the following components (in millions):

  	  	Year ended December 31,	 	
 	  	2005	  	2004	 	 	2003	 	
Current:	  			  				 				
Federal	  	$	310.5	  	$	228.9	 	 	$	213.8	 	
State and local	  	 	41.9	  	 	30.7	 	 	 	26.6	 	
Foreign	  	 	39.4	  	 	39.8	 	 	 	25.2	 	
	  	 	 	  	 	 	 	 	 	 	 	
Total current taxes	  	 	391.8	  	 	299.4	 	 	 	265.6	 	
				
Deferred:	  			  				 				
Federal	  	 	11.6	  	 	47.2	 	 	 	60.0	 	
State and local	  	 	3.1	  	 	5.0	 	 	 	4.7	 	
Foreign	  	 	10.2	  	 	(4.6	)	 	 	(1.4	)	
	  	 	 	  	 	 	 	 	 	 	 	
Total deferred taxes	  	 	24.9	  	 	47.6	 	 	 	63.3	 	
	  	 	 	  	 	 	 	 	 	 	 	
	  	$	416.7	  	$	347.0	 	 	$	328.9	 	

F-23

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of Western Union’s assets and liabilities. The following table outlines the principal components of deferred tax items (in millions):

 	  	December 31,	
 	  	2005	  	2004	
Deferred tax assets related to:	  			  			
Reserves and accrued expenses	  	$	15.1	  	$	4.4	
Pension obligations	  	 	25.6	  	 	30.3	
Deferred revenue	  	 	6.2	  	 	3.4	
Other	  	 	11.0	  	 	10.4	
	  	 	 	  	 	 	
Total deferred tax assets	  	 	57.9	  	 	48.5	
	  	 	 	  	 	 	
Deferred tax liabilities related to:	  			  			
Property, equipment and intangibles	  	 	292.8	  	 	239.3	
Net undistributed earnings	  	 	—  	  	 	3.0	
Other	  	 	13.2	  	 	10.7	
	  	 	 	  	 	 	
Total deferred tax liabilities	  	 	306.0	  	 	253.0	
	  	 	 	  	 	 	
Net deferred tax liability	  	$	248.1	  	$	204.5	

At December 31, 2005, no provision had been made for U.S. federal and state income taxes on foreign earnings of approximately $552.5 million, which are expected to be reinvested outside the U.S. indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, Western Union would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes, and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. tax liability is not practicable because of the complexities associated with its hypothetical calculation.
 
To address certain aspects of a 2003 legal restructuring of Western Union’s international operations, First Data initiated discussions with the Internal Revenue Service (“IRS”) pursuant to the IRS’s Advance Pricing Agreement (“APA”) Program. If an APA is successfully negotiated, the Company generally will avoid further examination, during the term of the APA, of the transfer pricing methods applicable to, and valuations of, the covered transactions. The Company continues to negotiate with the IRS in the APA process, and while it is hopeful of reaching resolution through the process, there can be no assurances that the APA negotiations will be resolved in a manner acceptable to the Company. If not so resolved, the matter would then likely proceed to other forums within the IRS. The Company has established contingency reserves for material, known tax exposures, including the potential for tax audit adjustments with respect to taxes associated with its foreign business that is the subject of the 2003 legal restructuring and the IRS’s APA Program discussions referenced above. These tax reserves reflect what the Company believes to be reasonable assumptions as to the likely resolution of the issues involved if subject to judicial review. While the Company believes that its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed the Company’s related reserve. Regarding the 2003 legal restructuring, the Company has benefited by having its income from certain foreign-to-foreign money transfer transactions taxed at relatively low foreign tax rates rather than the United States statutory tax rate. The amount of taxes attributable to such rate differential is included in the “Foreign rate differential” line in the effective tax rate reconciliation above and cumulatively totaled $131.6 million through December 31, 2005. Any differences
 
F-24

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
from Western Union’s positions as recorded in its financial statements upon resolution of these issues will be reflected as a part of income tax expense in the period during which the resolution occurs. Such resolution could also affect Western Union’s effective tax rate for future periods.
 
Western Union is subject to other tax matters which management believes will not result in a material adverse effect on Western Union’s financial position, results of operations or cash flows. Western Union accrues for loss contingencies as they become probable and estimable.
 
10. Employee Benefit Plans
 
Defined Contribution Plans
 
Eligible full-time employees of Western Union are covered under one of two defined contribution retirement and savings plans. Non-union employees participate in a First Data sponsored plan. Non-union employees make voluntary contributions to this plan and receive up to a 3% Western Union matching contribution, service related contributions of 1.5% to 3% of eligible employee compensation and additional discretionary Western Union contributions. Union employees receive a contribution from the Company of 4% of eligible employee compensation, and those union employees who make voluntary contributions receive up to a 1.5% matching contribution and a $650 per employee lump-sum contribution per year. In addition, First Data provides non-qualified deferred compensation plans for certain highly compensated employees. These plans provide tax-deferred contributions, matching and the restoration of Company contributions under the defined contribution plans otherwise limited by IRS or plan limits. The aggregate amount charged to expense in connection with these plans was $8.1 million, $7.5 million and $6.5 million during the years ended December 31, 2005, 2004 and 2003, respectively.
 
Defined Benefit Plans
 
FFMC’s acquisition of WUFSI in November 1994 included the assumption of $304.0 million of underfunded pension obligations related to two frozen defined benefit pension plans. Benefit accruals under these plans were frozen in 1988. First Data reduced these underfunded obligations by contributing $35.6 million in 2004 and $20.2 million in 2003 to the plans. No contributions were made by First Data in 2005. As part of the Distribution, Western Union will be responsible for any remaining underfunded pension obligations. Western Union does not expect to contribute to the pension plans in 2006. A September 30 measurement date is used for the Company’s plans.
 
F-25

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The following table provides a reconciliation of the changes in the pension plans’ benefit obligations and fair value of assets for the plan years ended September 30, 2005 and 2004, and a statement of the funded status of the plans as of September 30, 2005 and 2004 (in millions):

  	  	September 30,	 	
 	  	2005	 	 	2004	 	
Change in benefit obligation	  				 				
Benefit obligation at October 1,	  	$	515.7	 	 	$	515.0	 	
Interest costs	  	 	25.6	 	 	 	29.0	 	
Actuarial loss	  	 	0.4	 	 	 	20.8	 	
Benefits paid	  	 	(47.6	)	 	 	(49.1	)	
	  	 	 	 	 	 	 	 	
Benefit obligation at September 30,	  	 	494.1	 	 	 	515.7	 	
			
Change in plan assets	  				 				
Fair value of plan assets at October 1,	  	 	432.8	 	 	 	411.9	 	
Actual return on plan assets	  	 	39.1	 	 	 	34.4	 	
Benefits paid	  	 	(47.6	)	 	 	(49.1	)	
Contributions	  	 	—  	 	 	 	35.6	 	
	  	 	 	 	 	 	 	 	
Fair value of plan assets at September 30,	  	 	424.3	 	 	 	432.8	 	
	  	 	 	 	 	 	 	 	
Funded status of the plan	  	 	(69.8	)	 	 	(82.9	)	
Unrecognized amounts, principally net loss	  	 	114.2	 	 	 	121.8	 	
	  	 	 	 	 	 	 	 	
Total recognized	  	$	44.4	 	 	$	38.9	 	

According to SFAS No. 87, “Employers’ Accounting for Pensions” (“SFAS 87”), the pension obligations and changes in the value of plan assets to meet those obligations are not recognized as actuarial gains and losses of the plan as they occur but are recognized systematically over subsequent periods. These differences are treated as an unrecognized net gain/loss and not an immediate recognized amount.
 
The following table provides the amounts recognized in the Combined Balance Sheets (in millions):

  	  	December 31,	 	
 	  	2005	 	 	2004	 	
Accrued benefit liability	  	$	(69.8	)	 	$	(82.9	)	
Accumulated other comprehensive income	  	 	114.2	 	 	 	121.8	 	
	  	 	 	 	 	 	 	 	
Net amount recognized	  	$	44.4	 	 	$	38.9	 	

For the plan years ended September 30, 2005 and 2004, the projected benefit obligation was equal to the accumulated benefit obligation.
 
The following table provides the components of net periodic benefit income for the plans (in millions):

  	  	Six Months Ended
June 30,	 	 	Year ended December 31,	 	
 	  	  2006  	 	 	  2005  	 	 	2005	 	 	2004	 	 	2003	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Interest cost	  	$	12.4	 	 	$	12.8	 	 	$	25.6	 	 	$	29.0	 	 	$	31.9	 	
Expected return on plan assets	  	 	(14.9	)	 	 	(16.9	)	 	 	(33.8	)	 	 	(35.3	)	 	 	(35.1	)	
Amortization	  	 	2.1	 	 	 	1.3	 	 	 	2.7	 	 	 	0.7	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit income	  	$	(0.4	)	 	$	(2.8	)	 	$	(5.5	)	 	$	(5.6	)	 	$	(3.2	)	

F-26

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The minimum pension liability included in other comprehensive income (loss), net of tax, decreased $4.9 million in 2005, increased $13.6 million in 2004 and increased $5.1 million in 2003.
 
The weighted-average rate assumptions used in the measurement of the Company’s benefit obligation are as follows:

 	  	2005	 	 	2004	 	
Discount rate	  	5.25	%	 	5.18	%	
 
The weighted-average rate assumptions used in the measurement of the Company’s net cost (income) are as follows:

 	  	2005	 	 	2004	 	 	2003	 	
Discount rate	  	5.19	%	 	5.90	%	 	6.40	%	
Expected long-term return on plan assets	  	7.75	%	 	8.00	%	 	8.00	%	
 
SFAS 87 requires the sponsor of a defined benefit plan to measure the plan’s obligations and annual expense using assumptions that reflect best estimates and are consistent to the extent that each assumption reflects expectations of future economic conditions. As the bulk of the pension benefits will not be paid for many years, the computation of pension expenses and benefits is based on assumptions about future interest rates and expected rates of return on plan assets. In general, pension obligations are most sensitive to the discount rate assumption, and it is set based on the rate at which the pension benefits could be settled effectively.
 
Western Union employs a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established using a building block approach with proper consideration of diversification and re-balancing. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
 
Pension plan asset allocation at September 30, 2005 and 2004, and target allocations based on investment policies, are as follows:

  	  	Percentage of Plan Assets
at Measurement Date	
Asset Category	  	2005	 	2004	
Equity securities	  	44%	 	44%	
Debt securities	  	55%	 	54%	
Other	  	    1%	 	    2%	
	  	 	 	 	
	  	100%	 	100%	

				
   	  	Target Allocation	 	
Equity securities	  	30-50	%	
Debt securities	  	50-60	%	
Other	  	0-10	%	
 
F-27

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The following table details plan assets invested in related party securities:

 	  	2005	 	
Plan Asset Holdings	  	Shares
(in thousands)	  	Fair Market
Value
(in millions)	  	% of Total
Plan Assets	 	
First Data common stock	  	18.1	  	$	0.7	  	0.16	%	
Bank of New York common stock	  	23.8	  	$	0.7	  	0.16	%	
Hewitt Associates, Inc. common stock	  	5.5	  	$	0.1	  	0.02	%	

 	  	2004	 	
Plan Asset Holdings	  	Shares
(in thousands)	  	Fair Market
Value
(in millions)	  	% of Total
Plan Assets	 	
First Data common stock	  	54.2	  	$	2.4	  	0.55	%	
Bank of New York common stock	  	42.8	  	$	1.2	  	0.28	%	
Hewitt Associates, Inc. common stock	  	11.8	  	$	0.3	  	0.07	%	
 
The maturities of debt securities at September 30, 2005 range from current to 49 years with a weighted-average maturity of 14 years.
 
Western Union employs a total return investment approach whereby a mix of equities and fixed income investments are used in an effort to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities and plan funded status. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as securities deemed to be growth, value, and small and large capitalizations. Other assets, primarily private equity, are used judiciously in an effort to enhance long-term returns while improving portfolio diversification. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies.
 
The estimated future benefit payments are expected to be $46.2 million in 2006, $45.0 million in 2007, $44.0 million in 2008, $42.9 million in 2009, $41.8 million in 2010 and $189.8 million in 2011 through 2015.
 
Western Union administers a post-retirement health care plan to union employees that was in effect when First Data acquired FFMC. Generally, retired employees bear the entire cost of the premiums. Western Union also offers a short-term disability plan for union employees.
 
11. Operating Lease Commitments
 
Western Union leases certain real properties for use as customer service centers and administrative and sales offices. Western Union also leases data communications terminals, computers and office equipment. Certain of these leases contain renewal options and escalation provisions. Total rent expense under operating leases was $28.6 million, $26.3 million and $21.8 million during the years ended December 31, 2005, 2004 and 2003, respectively.
 
F-28

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
As of December 31, 2005, the minimum aggregate rental commitments under all noncancelable operating leases, net of sublease income commitments, are as follows (in millions):

Year Ending December 31,	  	 	
2006	  	$	25.1	
2007	  	 	19.1	
2008	  	 	15.6	
2009	  	 	8.7	
2010	  	 	7.0	
Thereafter	  	 	23.8	
	  	 	 	
Total future minimum lease payments	  	$	99.3	

12. Commitments and Contingencies
 
In the normal course of business, Western Union is subject to claims and litigation. Management of Western Union believes such matters involving a reasonably possible chance of loss will not, individually or in the aggregate, result in a materially adverse effect on Western Union’s combined financial position, results of operations or cash flows. Western Union accrues for loss contingencies as they become probable and estimable.
 
Western Union is subject to unclaimed or abandoned property (escheat) laws in the United States and abroad which require the Company to turn over to certain government authorities the property of others held by the Company that has been unclaimed for a specified period of time, such as unredeemed money transfers. The Company holds property subject to escheat laws and the Company has an ongoing program to comply with those laws. The Company is subject to audit with regard to its escheatment practices.
 
In 2002, Affiliated Computer Services (“ACS”) notified First Data of its intent to audit First Data’s escheatment practices (and those of all its subsidiaries) on behalf of 19 states (the “ACS States”). The ACS States have subsequently increased to 44 states. However, the ACS States have agreed to allow First Data and its subsidiaries to conduct an internal examination of their escheatment practices utilizing third-party experts. First Data has independently entered into Voluntary Disclosure Agreements with four other states (the “VDA States”). Like the ACS States, the VDA States agreed to allow First Data and its subsidiaries to conduct their own internal review in place of an audit by the states.
 
First Data completed the majority of its internal review in December 2005. As a result of that review, and in addition to amounts already recorded, the Company recognized an $8.2 million pretax charge in the fourth quarter of 2005 for domestic and international escheatment liabilities (portions of this charge are not scheduled to be remitted until periods beyond 2006).
 
Western Union plans to complete the internal review and discuss the results thereof with the ACS States and the VDA States in 2006. Any difference between the amounts accrued by the Company and that claimed by a state or foreign jurisdiction will be reflected in the periods in which any resolutions occur.
 
The Company has $32.8 million in outstanding letters of credit at December 31, 2005 with expiration dates through 2010, certain of which contain a one-year renewal option. The letters of credit are held in connection with lease arrangements and agent settlement agreements. The Company expects to renew the letters of credit prior to expiration.
 
F-29

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
13. Accumulated Other Comprehensive Loss
 
The income tax effects allocated to and the cumulative balance of each component of accumulated other comprehensive loss are as follows (in millions):

December 31, 2005	  	Beginning
Balance	 	 	Pretax Gain
(Loss)	 	 	Tax Benefit
(Expense)	 	 	Net of Tax
Amount	 	 	Ending
Balance	 	
Unrealized gains (losses) on investment securities	  	$	3.8	 	 	$	(3.4	)	 	$	1.2	 	 	$	(2.2	)	 	$	1.6	 	
Foreign currency translation adjustment	  	 	15.3	 	 	 	(7.2	)	 	 	2.4	 	 	 	(4.8	)	 	 	10.5	 	
Minimum pension liability	  	 	(79.1	)	 	 	7.6	 	 	 	(2.7	)	 	 	4.9	 	 	 	(74.2	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(60.0	)	 	$	(3.0	)	 	$	0.9	 	 	$	(2.1	)	 	$	(62.1	)	

December 31, 2004	  	Beginning
Balance	 	 	Pretax Gain
(Loss)	 	 	Tax Benefit
(Expense)	 	 	Net of Tax
Amount	 	 	Ending
Balance	 	
Unrealized gains (losses) on investment securities	  	$	6.8	 	 	$	(4.6	)	 	$	1.6	 	 	$	(3.0	)	 	$	3.8	 	
Foreign currency translation adjustment	  	 	13.6	 	 	 	2.7	 	 	 	(1.0	)	 	 	1.7	 	 	 	15.3	 	
Minimum pension liability	  	 	(65.5	)	 	 	(20.8	)	 	 	7.2	 	 	 	(13.6	)	 	 	(79.1	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(45.1	)	 	$	(22.7	)	 	$	7.8	 	 	$	(14.9	)	 	$	(60.0	)	

December 31, 2003	  	Beginning
Balance	 	 	Pretax Gain
(Loss)	 	 	Tax Benefit
(Expense)	 	 	Net of Tax
Amount	 	 	Ending
Balance	 	
Unrealized gains (losses) on investment securities	  	$	8.2	 	 	$	(2.1	)	 	$	0.7	 	 	$	(1.4	)	 	$	6.8	 	
Foreign currency translation adjustment	  	 	2.5	 	 	 	17.1	 	 	 	(6.0	)	 	 	11.1	 	 	 	13.6	 	
Minimum pension liability	  	 	(60.4	)	 	 	(7.9	)	 	 	2.8	 	 	 	(5.1	)	 	 	(65.5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(49.7	)	 	$	7.1	 	 	$	(2.5	)	 	$	4.6	 	 	$	(45.1	)	

14. Derivative Financial Instruments
 
Western Union is exposed to risk relating to fluctuations in foreign currency exchange rates, primarily the euro, Swiss franc, British pound and Canadian dollar. Western Union utilizes longer term foreign currency forward contracts, generally with maturities of one year, to mitigate some of this risk. In addition, Western Union utilizes short-term foreign exchange forward contracts to offset foreign exchange rate fluctuations on settlement assets and settlement obligations. The Company’s policy is to minimize its exposure related to adverse changes in foreign currency exchange rates. The Company’s objective is to engage in risk management strategies that provide adequate downside protection. For all periods presented, the Company had no foreign currency derivatives that qualified as hedges under SFAS No. 133.
 
Western Union does not believe its derivative financial instruments expose it to more than a nominal amount of credit risk as the counterparties are established, well-capitalized financial institutions with credit ratings of “A” or better from major rating agencies. The credit risk inherent in these agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. Western Union performs a review at inception of the hedge, as circumstances warrant, and at least on a quarterly basis of the credit risk of these counterparties. Western Union also monitors the concentration of its contracts with any individual counterparty. Western Union anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. Western Union’s exposures are in liquid currencies so there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future.

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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The aggregate notional amount of foreign currency forward contracts held by the Company with external third parties as of the balance sheet dates (denominated in the respective foreign currency) are as follows (in millions):

 	  	December 31,	
 	  	2005	  	2004	
Euro	  	243.0	  	219.7	
British pound	  	27.7	  	26.7	
Swiss franc	  	18.2	  	—  	
Canadian dollar	  	35.9	  	30.8	
 
As of December 31, 2005 and 2004, the carrying value and fair value of Western Union’s foreign currency forward contracts with external third parties was an $18.3 million net asset and a $31.1 million net liability, respectively, which are included in the “other assets” and “other liabilities” captions in the accompanying Combined Balance Sheets.
 
The aggregate notional amount of foreign currency swap arrangements held by the Company with affiliates (Note 3) totaled 238.1 million euros at December 31, 2005. No such foreign currency swap arrangements existed at December 31, 2004. The fair market value of these swaps ($7.2 million asset as of December 31, 2005) will be settled in cash along with the related notes receivable in connection with the spin-off.
 
15. Stock Compensation Plans
 
Stock Options and Employee Stock Purchase Plan Rights
 
Western Union participates in the First Data plans that provide for the granting of stock options to employees and other key individuals who perform services for the Company. A total of 237.8 million shares of First Data common stock have been reserved for issuance under the plans and a total of 44.8 million and 34.4 million shares remain available for future grant at December 31, 2005 and June 30, 2006, respectively. The options have been issued at prices equivalent to or in excess of the fair market value of First Data common stock at the dates of grant, have 10-year terms and become exercisable in three or four equal annual increments beginning 12 months after the dates of grant. The requisite service period for stock options is the same as the vesting period, with the exception of retirement eligible employees who have shorter requisite service periods ending when the employees become retirement eligible. Compensation expense related to stock options is recognized over the requisite service period, except as discussed further below for certain options granted prior to the adoption of SFAS 123R (Note 2).
 
In October 1996, First Data instituted an employee stock purchase plan (“ESPP”) for which a total of 24.0 million First Data shares have been reserved for issuance, of which 7.0 million and 6.0 million shares remain available for future purchase at December 31, 2005 and June 30, 2006, respectively. Amounts accumulated through payroll deductions elected by eligible employees are used to make quarterly purchases of First Data common stock at a 15% discount from the lower of the market price at the beginning or end of the quarter. The fair value of these awards was recognized as compensation expense in the Combined Statements of Income for the six months ended June 30, 2006 in accordance with the provisions of SFAS 123R.
 
First Data received all cash proceeds and realized and retained all tax benefits related to the exercise of stock options and ESPP purchases by Western Union employees during all periods presented.
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
A summary of First Data stock option activity relating to Western Union employees for the years ended December 31, 2005, 2004 and 2003 is as follows (options in millions):

  	  	2005	  	2004	  	2003	
 	  	Options	 	 	Weighted-Average
Exercise Price	  	Options	 	 	Weighted-Average
Exercise Price	  	Options	 	 	Weighted-Average
Exercise Price	
Outstanding at January 1,	  	8.1	 	 	$	36	  	6.3	 	 	$	33	  	6.0	 	 	$	32	
Granted	  	0.5	 	 	 	40	  	3.2	 	 	 	40	  	1.6	 	 	 	35	
Exercised	  	(0.8	)	 	 	29	  	(0.6	)	 	 	26	  	(0.9	)	 	 	25	
Canceled	  	(0.4	)	 	 	39	  	(0.4	)	 	 	39	  	(0.6	)	 	 	35	
Net employee transfers from (to) other FDC businesses	  	0.5	 	 	 	35	  	(0.4	)	 	 	34	  	0.2	 	 	 	34	
	  	 	 	 			  	 	 	 			  	 	 	 			
Outstanding at December 31,	  	7.9	 	 	$	37	  	8.1	 	 	$	36	  	6.3	 	 	$	33	
	  	 	 	 			  	 	 	 			  	 	 	 			
Options exercisable at December 31,	  	7.0	 	 	$	37	  	2.5	 	 	$	31	  	1.8	 	 	$	26	

A summary of First Data stock option activity relating to Western Union employees for the six months ended June 30, 2006 is as follows (options and aggregate intrinsic value in millions):

  	  	Six Months Ended June 30, 2006	
 	  	Options	 	 	Weighted-
Average
Exercise
Price	  	Weighted-
Average
Remaining
Contractual
Term	  	Aggregate
Intrinsic Value	
Outstanding at January 1,	  	7.9	 	 	$	37	  		  			
Granted	  	1.8	 	 	$	44	  		  			
Exercised	  	(1.5	)	 	$	36	  		  			
Net employee transfers from (to) other FDC businesses	  	(0.1	)	 	$	43	  		  			
	  	 	 	 			  		  			
Outstanding at June 30,	  	8.1	 	 	$	39	  	7 years	  	$	54.7	
	  	 	 	 			  		  			
Options exercisable at June 30,	  	6.0	 	 	$	37	  	7 years	  	$	50.2	

The total intrinsic value of stock options exercised by Western Union employees during the six months ended June 30, 2006 and 2005 was $16.2 million and $1.7 million, respectively.
 
F-32

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
The following summarizes information about First Data stock options outstanding at December 31, 2005 for Western Union employees (options in millions):

  	  	Options Outstanding	  	Options Exercisable	
Range of
Exercise Prices	  	Number
Outstanding
at 12/31/05	  	Weighted-
Average
Remaining
Contractual
Life	  	Weighted-
Average Exercise
Price	  	Number
Exercisable
at 12/31/05	  	Weighted-
Average
Exercise Price	
$12.02–$17.00	  	0.2	  	3	  	$	14	  	0.2	  	$	14	
$18.28–$22.44	  	0.3	  	4	  	$	22	  	0.3	  	$	22	
$24.06–$29.83	  	0.7	  	5	  	$	29	  	0.7	  	$	29	
$32.45–$35.95	  	1.4	  	7	  	$	34	  	1.3	  	$	34	
$36.04–$91.37	  	5.3	  	8	  	$	40	  	4.5	  	$	40	
	  	 	  		  			  	 	  			
	  	7.9	  	7	  	$	37	  	7.0	  	$	37	

Restricted Stock Awards and Restricted Stock Units
 
In February 2005, First Data awarded 50,000 shares of restricted stock to the Chief Executive Officer of Western Union. The stock award vests at 25% per year on the anniversary date of the grant if the Chief Executive Officer is still employed by First Data at the time. The fair value of the 2005 grant of $2.0 million was recorded based on the market value of the shares on the date of grant and is being amortized over four years.
 
In February 2004, First Data awarded 50,000 shares of restricted stock to the Chief Executive Officer of Western Union. The stock award vests if the Chief Executive Officer is still employed on the earlier of (i) February 25, 2009 or (ii) at any time after February 25, 2007 if on each trading day during the previous 30-day period the highest intra-day trading price of the First Data’s common stock on the New York Stock Exchange is equal to or greater than $70.00 per share. The fair value of the 2004 grant of $2.0 million was recorded based on the market value of the shares on the date of grant and is being amortized over five years.
 
During the first quarter of 2006, First Data implemented a new incentive compensation plan for certain employees which provides for the issuance of restricted stock awards or restricted stock units upon the achievement of certain performance criterion. Once the performance criterion are met, which First Data currently deems probable, the awards will vest at 33% per year on the anniversary date of the grant. The fair value of the awards granted in February 2006 was measured based on the market value of the shares on the date of grant and is being amortized over three years.
 
A summary of First Data restricted stock award and restricted stock unit activity relating to Western Union employees for the six-month period ended June 30, 2006 is as follows (awards/units in millions):

  	  	Six Months Ended 
June 30, 2006	
 	  	Number
Outstanding	  	Weighted-
Average
Grant-Date
Fair Value	
Non-vested at January 1,	  	0.1	  	$	40.45	
Granted	  	0.2	  	$	47.80	
Vested	  	—  	  	$	40.08	
Forfeited	  	—  	  	$	47.80	
	  	 	  			
Non-vested at June 30,	  	0.3	  	$	43.39	

F-33

Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Stock-Based Compensation
 
In December 2005, First Data accelerated vesting of all outstanding unvested stock options granted by First Data to its officers and employees under First Data’s 2002 Long-Term Incentive Plan. The decision to accelerate the vesting of these stock options was made primarily to reduce stock-based compensation expense that otherwise likely would be recorded in future periods following the adoption of SFAS 123R, which became effective January 1, 2006. The Company recognized compensation expense of $1.8 million during the fourth quarter of 2005 resulting from accelerated vesting. The Company must recognize compensation expense related to any awards outside of the 2002 Long-Term Incentive Plan that are not fully vested as of January 1, 2006, as well as options granted after that date.
 
As discussed in Note 2, effective January 1, 2006, the Company adopted SFAS 123R following the modified prospective method. The following table sets forth total stock-based compensation expense (benefit) recognized in the noted line items of the Combined Statements of Income resulting from First Data stock options, restricted stock awards, restricted stock units, as well as ESPP rights for Western Union employees for the six month period ended June 30, 2006 (in millions):

  	  	Six Months ended
June 30,
2006	 	
Income before income taxes	  	$	6.1	 	
Income tax benefit from stock-based compensation expense	  	 	(1.8	)	
	  	 	 	 	
Net income	  	$	4.3	 	

There was no stock-based compensation capitalized during the six months ended June 30, 2006.
 
For periods prior to the adoption of SFAS 123R, pro forma information regarding the Company’s net income is required by SFAS No. 123, “Accounting for Stock Based Compensation” (“SFAS 123”), as if the Company had accounted for its employee stock options under the fair value method prescribed by SFAS 123. The Company’s pro forma information for the six month period ended June 30, 2005 and the years ended December 31, 2005, 2004 and 2003 under SFAS 123, which reflects compensation expense equal to the fair value of the options, restricted stock awards and ESPP rights for Western Union Employees recognized over their vesting periods, is as follows (in millions):

  	  	Six Months
Ended
June 30,
2005	 	 	Year Ended December 31,	 	
 	  			 	2005	 	 	2004	 	 	2003	 	
Reported net income	  	$	451.6	 	 	$	927.4	 	 	$	751.6	 	 	$	633.7	 	
Restricted stock expense and effect of accelerated vesting included in reported net income, net of tax	  	 	0.2	 	 	 	1.9	 	 	 	—  	 	 	 	—  	 	
SFAS No. 123 expense, net of tax	  	 	(8.2	)	 	 	(37.7	)	 	 	(14.9	)	 	 	(14.1	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma net income	  	$	443.6	 	 	$	891.6	 	 	$	736.7	 	 	$	619.6	 	

Certain of the Company’s employee stock-based compensation awards have terms that provide for vesting to continue after retirement. Prior to the adoption of SFAS 123R, the Company accounted for this type of
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
arrangement by recognizing pro forma compensation cost over the stated vesting period for the SFAS 123 pro forma disclosures. Upon adoption of SFAS 123R, compensation cost is being recognized over a shorter period that ends with retirement eligibility. The impact of applying SFAS 123R requirements for accelerated expense recognition would have impacted pro forma SFAS 123 compensation expense, net of tax, by benefits of $0.2 million and $1.7 million during the six-month period ended June 30, 2005 and year ended December 31, 2005, respectively, and charges of $1.0 million and $0.7 million for the years ended December 31, 2004 and 2003, respectively.
 
As of June 30, 2006, there was $14.9 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of four years. As of June 30, 2006, there was $10.3 million of total unrecognized compensation cost related to non-vested restricted stock awards and restricted stock units which is expected to be recognized over a weighted-average period of 3 years.
 
The fair value for First Data stock options and ESPP rights granted to Western Union employees for the six months ended June 30, 2006 and 2005 and the years ended December 31, 2005, 2004 and 2003 was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

 	  	Six Months ended
June 30,	 	 	Year ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
Stock Options Granted:	  			 			 			 			 			
Weighted average risk-free interest rate	  	4.61	%	 	4.01	%	 	4.14	%	 	3.25	%	 	2.95	%	
Weighted average dividend yield	  	0.58	%	 	0.57	%	 	0.58	%	 	0.20	%	 	0.22	%	
Volatility	  	23.6	%	 	34.8	%	 	32.7	%	 	30.5	%	 	37.0	%	
Expected term (in years)	  	5.0	 	 	6.0	 	 	6.0	 	 	5.0	 	 	5.0	 	
Weighted average fair value	  	$12	 	 	$16	 	 	$15	 	 	$13	 	 	$13	 	
						
ESPP:	  			 			 			 			 			
Weighted average risk-free interest rate	  	4.77	%	 	2.62	%	 	3.12	%	 	1.69	%	 	2.89	%	
Weighted average dividend yield	  	0.56	%	 	0.58	%	 	0.58	%	 	0.20	%	 	0.22	%	
Volatility	  	23.0	%	 	19.0	%	 	19.1	%	 	20.5	%	 	35.9	%	
Expected term (in years)	  	0.25	 	 	0.25	 	 	0.25	 	 	0.25	 	 	0.25	 	
Weighted average fair value	  	$  9	 	 	$  8	 	 	$  8	 	 	$  8	 	 	$  7	 	
 
Expected volatility —Prior to 2006, the Company used historical volatility to estimate the grant-date fair value of stock options and ESPP rights. The Company changed its method of estimating expected volatility for all stock options granted and ESPP rights after January 1, 2006 to implied volatility. The change in assumption, made in conjunction with the adoption of SFAS 123R, is expected to result in a more accurate estimate of the grant-date fair value of employee stock options. The Company calculates implied volatility on a daily basis using a Black-Scholes option pricing model. This calculation incorporates the market prices of a variety of traded options, the market price of the Company’s stock, the exercise price and remaining term of the traded options, the expected dividends, and the risk-free rate. The traded options used are similar in exercise price to awards granted to employees, are near-the-money, and typically have a remaining maturity of greater than one year. For each grant, the Company uses the average of the daily implied volatilities for the six months preceding the grant date. Using implied volatility versus historical volatility to value the stock options granted in the six months ended June 30, 2006 resulted in a decrease in the total grant-date fair value, to be recognized over the requisite service period, of approximately $4.6 million.
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
Expected dividend yield —The dividend yield is the calculation of a rolling 12-month average First Data stock price divided by the annualized First Data dividend rate of $0.24 as of June 30, 2006.
 
Expected term —The Company has aggregated stock option awards into classes. For each class, the expected term is primarily based on the results of a study performed on the historical exercise and post-vesting employment termination behavior for similar grants. The expected terms are as follows: 4.5 year life for employees (Non-Board of Directors, Non-Executive Committee), 7 year life for the Board of Directors and 7.5 year life for the Executive Committee. The expected term of ESPP rights is determined to be 0.25 years as purchase rights are achieved over the course of the quarter in which the employee participates in the ESPP. Once the shares have been purchased, the employee can sell their respective shares.
 
Risk-free interest rate —The risk-free rate for stock options granted during the period is determined by using a zero-coupon U.S. Treasury rate for the period that coincides with the expected terms listed above. The risk-free rate for ESPP rights is determined by using a 3-month maturity U.S. Treasury bond rate for the 90 day period that coincides with the expected terms listed above.
 
16. Segment Information
 
The Company classifies its businesses into two reportable segments: consumer-to-consumer and consumer-to-business (Note 1). Operating segments are defined by SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information,” as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.
 
The consumer-to-consumer reporting segment is viewed as one global network where a money transfer can be sent from one location to another, anywhere in the world. The segment is managed as three regions, primarily to coordinate agent network management and marketing activities. The Company’s CODM makes decisions regarding resource allocation and monitors performance based on specific corridors within and across these regions, but also reviews total revenue and operating profit of each region. Each region and corridor offer the same services distributed by the same agent network, have the same types of customers, are subject to similar regulatory requirements, are processed on the same system, and have similar economic characteristics, allowing the geographic regions to be aggregated into one reporting segment. Consumer-to-consumer segment revenue typically increases sequentially from the first quarter to the fourth quarter each year and declines from the fourth quarter to the first quarter of the following year. This seasonal fluctuation is related to the holiday season in the United States and other countries in the fourth quarter.
 
All businesses that have not been classified into consumer-to-consumer or consumer-to-business, primarily the Company’s money order business and prepaid services, are reported as “Other.” The Company previously operated internet auction payments, messaging and international prepaid cellular top-up businesses. These three businesses, representing aggregated revenues in 2005, 2004 and 2003 of $28.9 million, $35.4 million and $38.1 million, respectively, and operating loss before taxes of $16.2 million, $8.2 million and $1.4 million, respectively, were shut down or sold in 2005 and early 2006. Due to the immaterial nature of these three businesses, they have not been presented separately as discontinued operations.
 
The Company’s reportable segments are reviewed separately below because each reportable segment represents a strategic business unit that offers different products and serves different markets. The business
 
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Table of Contents
THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
segment measurements provided to, and evaluated by, the Company’s CODM are computed in accordance with the following principles:
 
 	•	 	The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.	
 
 	•	 	Segment revenue includes intersegment revenue.	
 
 	•	 	Corporate overhead is allocated to the segments based on a percentage of each segment’s revenue.	
 
 	•	 	Costs incurred to effect the spin-off are not allocated to the segments.	
 
 	•	 	Excluded all items not included in operating income.	
 
The following tables present the Company’s reportable segment results for the six month periods ended June 30, 2006 and 2005 and the years ended December 31, 2005, 2004 and 2003, respectively (in millions):

  	  	Six Months Ended
June 30,	 	 	Year Ended December 31,	 	
 	  	2006	 	 	2005	 	 	2005	 	 	2004	 	 	2003	 	
 	  	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Revenues:	  				 				 				 				 				
Consumer-to-Consumer:	  				 				 				 				 				
External revenue	  				 				 				 				 				
Transaction fees	  	$	1,469.4	 	 	$	1,290.0	 	 	$	2,724.0	 	 	$	2,390.9	 	 	$	2,050.8	 	
Foreign exchange revenue	  	 	308.9	 	 	 	248.0	 	 	 	529.6	 	 	 	448.3	 	 	 	379.7	 	
Other revenues	  	 	15.5	 	 	 	11.3	 	 	 	25.6	 	 	 	22.5	 	 	 	23.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	 	1,793.8	 	 	 	1,549.3	 	 	 	3,279.2	 	 	 	2,861.7	 	 	 	2,453.9	 	
Consumer-to-Business:	  				 				 				 				 				
External revenue	  				 				 				 				 				
Transaction fees	  	 	297.7	 	 	 	279.8	 	 	 	565.0	 	 	 	545.4	 	 	 	553.7	 	
Foreign exchange revenue	  	 	0.7	 	 	 	0.6	 	 	 	1.4	 	 	 	1.3	 	 	 	1.2	 	
Other revenues	  	 	17.9	 	 	 	15.9	 	 	 	33.8	 	 	 	29.6	 	 	 	31.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	 	316.3	 	 	 	296.3	 	 	 	600.2	 	 	 	576.3	 	 	 	586.1	 	
Other:	  				 				 				 				 				
External revenue	  				 				 				 				 				
Transaction fees	  	 	24.5	 	 	 	34.4	 	 	 	65.8	 	 	 	69.8	 	 	 	74.5	 	
Commission and other revenues	  	 	22.0	 	 	 	20.4	 	 	 	42.7	 	 	 	39.8	 	 	 	37.1	 	
Internal revenue	  	 	0.9	 	 	 	2.7	 	 	 	5.2	 	 	 	6.0	 	 	 	1.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	 	47.4	 	 	 	57.5	 	 	 	113.7	 	 	 	115.6	 	 	 	113.1	 	
Eliminations	  	 	(0.9	)	 	 	(2.7	)	 	 	(5.2	)	 	 	(6.0	)	 	 	(1.5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	$	2,156.6	 	 	$	1,900.4	 	 	$	3,987.9	 	 	$	3,547.6	 	 	$	3,151.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income:	  				 				 				 				 				
Consumer-to-Consumer	  	$	516.6	 	 	$	495.0	 	 	$	1,047.9	 	 	$	886.5	 	 	$	765.2	 	
Consumer-to-Business	  	 	112.2	 	 	 	112.0	 	 	 	220.4	 	 	 	219.5	 	 	 	230.0	 	
Other	  	 	10.3	 	 	 	5.6	 	 	 	0.9	 	 	 	6.1	 	 	 	7.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating income	  	$	639.1	 	 	$	612.6	 	 	$	1,269.2	 	 	$	1,112.1	 	 	$	1,003.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Assets:	  				 				 				 				 				
Consumer-to-Consumer	  	$	4,258.2	 	 	$	2,987.0	 	 	$	3,774.0	 	 	$	2,548.0	 	 	$	2,330.8	 	
Consumer-to-Business	  	 	535.8	 	 	 	568.6	 	 	 	587.0	 	 	 	565.8	 	 	 	504.4	 	
Other	  	 	201.6	 	 	 	214.9	 	 	 	245.4	 	 	 	216.4	 	 	 	194.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	4,995.6	 	 	$	3,770.5	 	 	$	4,606.4	 	 	$	3,330.2	 	 	$	3,029.9	 	

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THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003

 	  	Six Months Ended
June 30,	  	Year Ended
December 31,	
 	  	2006	  	2005	  	2005	  	2004	  	2003	
 	  	(unaudited)	  	 	  	 	  	 	
Depreciation and amortization:	  			  			  			  			  			
Consumer-to-Consumer	  	$	37.7	  	$	25.7	  	$	54.0	  	$	51.4	  	$	49.4	
Consumer-to-Business	  	 	9.2	  	 	10.1	  	 	19.8	  	 	21.2	  	 	23.4	
Other	  	 	2.2	  	 	3.2	  	 	5.7	  	 	6.6	  	 	5.6	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	49.1	  	$	39.0	  	$	79.5	  	$	79.2	  	$	78.4	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Capital expenditures:	  			  			  			  			  			
Consumer-to-Consumer	  	$	100.7	  	$	13.8	  	$	48.3	  	$	31.6	  	$	70.2	
Consumer-to-Business	  	 	10.8	  	 	4.5	  	 	12.7	  	 	12.8	  	 	24.7	
Other	  	 	2.9	  	 	1.4	  	 	4.0	  	 	5.1	  	 	4.9	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	114.4	  	$	19.7	  	$	65.0	  	$	49.5	  	$	99.8	

Information concerning principal geographic areas was as follows (in millions):

  	  	Year Ended December 31,	
 	  	2005	  	2004	  	2003	
Revenue:	  			  			  			
United States	  	$	1,842.7	  	$	1,708.3	  	$	1,640.7	
International	  	 	2,145.2	  	 	1,839.3	  	 	1,510.9	
	  	 	 	  	 	 	  	 	 	
Total	  	$	3,987.9	  	$	3,547.6	  	$	3,151.6	
	  	 	 	  	 	 	  	 	 	
Long-lived assets:	  			  			  			
United States	  	$	73.4	  	$	64.0	  	$	70.7	
International	  	 	9.0	  	 	6.7	  	 	9.0	
	  	 	 	  	 	 	  	 	 	
Total	  	$	82.4	  	$	70.7	  	$	79.7	

The geographic split of revenue above has been determined based upon the country where a money transfer is initiated and the country where a money transfer is paid with revenue being split 50% between the two countries. Long-lived assets, consisting of “Property and equipment, net,” are presented based upon the location of the assets.
 
A majority of Western Union’s consumer-to-consumer transactions involve at least one non-United States location. Based on the method used to attribute revenue between countries described in the paragraph above, no individual country outside the United States accounted for more than 10% of segment revenue for the six months ended June 30, 2006 or the years ended December 31, 2005, 2004 and 2003. In addition, no individual agent or biller accounted for greater than 10% of consumer-to-consumer or consumer-to-business segment revenue, respectively, during these periods.
 
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THE WESTERN UNION COMPANY
 
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
 
Six Months Ended June 30, 2006 and 2005 (unaudited) and
the Years Ended December 31, 2005, 2004 and 2003
 
17. Quarterly Financial Information (Unaudited)
 
Summarized quarterly results for the six months ended June 30, 2006 and the years ended December 31, 2005 and 2004 are as follows (in millions):

2006 by Quarter:	  	Q1	  	Q2	 	
Revenues	  	$	1,043.0	  	$	1,113.6	 	
Expenses	  	 	730.3	  	 	787.2	 	
Other income, net	  	 	12.2	  	 	(2.6	)	
	  	 	 	  	 	 	 	
Income before income taxes	  	 	324.9	  	 	323.8	 	
Income tax expense	  	 	105.1	  	 	104.9	 	
	  	 	 	  	 	 	 	
Net income	  	$	219.8	  	$	218.9	 	

																			
2005 by Quarter:	  	Q1	  	Q2	  	Q3	 	 	Q4	 	 	Year Ending
December 31,
2005	 	
Revenues	  	$	919.6	  	$	980.8	  	$	1,019.3	 	 	$	1,068.2	 	 	$	3,987.9	 	
Expenses	  	 	624.0	  	 	663.8	  	 	676.6	 	 	 	754.3	 	 	 	2,718.7	 	
Other income, net	  	 	20.1	  	 	21.9	  	 	8.6	 	 	 	24.3	 	 	 	74.9	 	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	315.7	  	 	338.9	  	 	351.3	 	 	 	338.2	 	 	 	1,344.1	 	
Income tax expense	  	 	97.9	  	 	105.1	  	 	109.4	 	 	 	104.3	 	 	 	416.7	 	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	217.8	  	$	233.8	  	$	241.9	 	 	$	233.9	 	 	$	927.4	 	

2004 by Quarter:	  	Q1	  	Q2	  	Q3	 	 	Q4	 	 	Year Ending
December 31,
2004	 	
Revenues	  	$	829.3	  	$	866.6	  	$	903.5	 	 	$	948.2	 	 	$	3,547.6	 	
Expenses	  	 	568.8	  	 	599.3	  	 	601.7	 	 	 	665.7	 	 	 	2,435.5	 	
Other income (expense), net	  	 	0.7	  	 	2.4	  	 	(1.4	)	 	 	(15.2	)	 	 	(13.5	)	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	261.2	  	 	269.7	  	 	300.4	 	 	 	267.3	 	 	 	1,098.6	 	
Income tax expense	  	 	82.5	  	 	85.2	  	 	94.9	 	 	 	84.4	 	 	 	347.0	 	
	  	 	 	  	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	178.7	  	$	184.5	  	$	205.5	 	 	$	182.9	 	 	$	751.6	 	

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 THE WESTERN UNION COMPANY
SCHEDULE II—Valuation and Qualifying Accounts
(Dollars in Millions)

Description	  	Balance at
Beginning
of Year	  	Charged to
Costs and
Expenses	  	Deductions	 	 	Balance at
End of Year	
Allowance for doubtful accounts for the years ended:	  			  			  				 			
December 31, 2005	  	$	13.3	  	$	16.1	  	$	(21.0	)	 	$	8.4	
December 31, 2004	  	$	16.3	  	$	13.6	  	$	(16.6	)	 	$	13.3	
December 31, 2003	  	$	18.9	  	$	13.7	  	$	(16.3	)	 	$	16.3	
 
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